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By; Robin Ford Wallace, Reporter


The Dade County Commission made it clear at its Thursday night special called meeting that its consent to join Walker and Catoosa counties in backing a bond issue to keep Hutcheson Medical Center afloat was grudged and conditional.

“I vote yes strictly pertaining and following those exact rules only, and I speak for myself: that we do actually lease this hospital to a legitimate group that is capable of making these bond payments and that we’re therefore not putting the burden on our taxpayers of Dade County in case it [the hospital] were to fail,” said Dade County Executive Chair-man Ted Rumley as the commission voted on the issue after the last of a series of executive-session, or closed-door, discussions.

But Rumley and other Dade representatives rushed after that meeting to one between the boards of directors of Hutcheson and of Chattanooga’s Erlanger Medical Center, and by Friday morning they were all smiles, their support of the bond issue far more enthusiastic.

“We think it’s a 100 percent positive outcome,” said Alex Case, Dade’s 911 director and one of Dade’s members on the three-county Hospital Authority Board, on Friday. “Every board member we spoke to last night, it’s the same way. They want to make this work.”

He explained that Dade’s backing of the bond issue – essentially a loan refinancing Hutcheson’s $50-plus- million debt that the county will co-sign – has been contingent on a lease agreement between Erlanger and the smaller hospital across the Georgia border in Fort Oglethorpe, with the understanding that Erlanger would guarantee the bond payments.

Erlanger formed a partnership with Hutcheson in 2011, lending management and millions of dollars to Hutcheson, which had for years been hemorrhaging money. Hutcheson was renamed Erlanger at Hutcheson, and under the management of a new CEO, Roger Forgey, began turning around financially.

More recently, the relationship between the two hospitals was to have matured into a lease of Hutcheson by Erlanger, but Case explained that a letter of intent to that effect had foundered in the details. “We tried this LOI a month ago. There was a few things that didn’t get met,” said Case. “Well, since Commissioner Heiskell, Commissioner Rumley, Commissioner Goff and all three county attorneys met with Erlanger themselves, it got fixed.”

Case referred, besides to Ted Rumley, to Walker County Sole Commissioner Bebe Heiskell and to Dade District 3 Commissioner Robert Goff.

Now, though the proverbial fat lady has not yet sung the final notes on this deal: “She almost sang,” said Case. “We’re almost 100 percent sure that lease is going to happen. This is the first time their board and our board have come together and voted unanimously on the same idea.”

Under the proposed lease agreement, Erlanger would guarantee the debt service for 10 years, said Case; the $70 million property owned by the three counties would be put up as collateral and their combined credit ratings would be used to procure an advantageous interest rate. 

“The lease payment of our county-owned facilities for Dade, Walker and Catoosa will be leased by Erlanger at a fair market value that will be evaluated by a third-party company and approved by the state attorney general,” said Case. “That value will be equal or more than the bond payments that we agreed to back.”  

Case said that whatever happened with Erlanger, the Hospital Authority had decided Hutcheson must in any case be leased to someone. “We’re going to lease it no matter what,” he said. “We have a drop-dead date of Aug. 9. If something is not done by then, we’re going to send an RFP [request for proposals] out to lease our facility to some other organization.”

But all board members are in agreement: It would be much better to lease the hospital to Erlanger, another nonprofit, community institution. “Erlanger’s got the same vision we do,” said Case.

It would take months to find and approve another prospective lessee, he said, and anyway it had to be a large, community hospital like Erlanger. “If we go to a private company, they don’t look at indigent care,” said Case. “They look at ultimate dollars.” 

Hutcheson is the appointed public hospital, and thus indigent care provider, for Dade, Walker and Catoosa counties, though Dade uses it dramatically less than the other two. Hutcheson sits squarely on the county line between Walker and Catoosa, but with Lookout Mountain in between, Dade patients are far likelier to go up I-59 to Erlanger or one of the other Chattanooga hospitals.

Thus Chairman Rumley and the other commissioners have balked at risking tax dollars to keep Hutcheson alive, especially given the way it piled up debt in the pre-Erlanger partnership years. Even when their representative in the Georgia House of Representatives, John Deffenbaugh, agreed to House Bill 628, which would force Dade to give up one of its two representatives on the Hospital Authority Board if it did not back its share of the refinance, Rumley and crew resisted signing on.

But with so-called Obamacare due to take effect in January, and with Southern governors refusing to cooperate in the plan, county officials worry that if Hutcheson goes away Dade may have no access to indigent care at all. “If Georgia and Tennessee don’t work some type of agreement out, if some of our folks that are indigent, that have no insurance, really, try to go to Erlanger or somewhere, they may not be able to be treated the way they could at a Georgia community hospital,” explained Case,

Case said details of the lease were still being worked out but he was confident that Erlanger, Hutcheson and the counties were now “singing from the same sheet of music.”

“There’s a lot of legal stuff, but we pushed all that stuff aside, we agreed on it, and it’s going forward,” he said.


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