Prime Healthcare, fresh off its deal to save a struggling metro Atlanta hospital, has now targeted another Georgia hospital under bankruptcy protection.
California-based Prime told GHN on Wednesday that it has made a bid to acquire Hutcheson Medical Center, a northwest Georgia facility that’s about to close.
Hutcheson, in the small community of Fort Oglethorpe, has a heavy debt load and big financial losses, and the bankruptcy court judge issued an order for closure Dec. 4. If that happens, it would make Hutcheson the fifth rural Georgia hospital to shut its doors since 2013.
Prime Healthcare Services and the nonprofit Prime Healthcare Foundation own and operate 38 acute-care hospitals in 11 states. They are known for acquiring financially distressed hospitals and turning them around.
The foundation’s purchase of Southern Regional Medical Center is set for review by the Georgia attorney general, after a bankruptcy court issued its final approval order on the deal for the Clayton County hospital in late October. The AG is considered likely to agree to the sale, based on past cases.
Southern Regional, in Riverdale south of Atlanta, would be California-based Prime’s first hospital in Georgia.
Prime Healthcare said Wednesday that it made an offer for all Hutcheson assets more than a week ago.
The California company originally sought Hutcheson’s nursing home as part of the deal. But Prime spokeswoman Elizabeth Nikels said in an email that the company was told that an alternative offer for the nursing home had already been made.
“We then made an offer for everything except the nursing home,’’ she said.
Maybrook Healthcare has offered to buy the nursing home for $7.2 million, according to the Chattanooga Times Free Press.
Nikels said Prime “is committed to keeping Hutcheson Medical Center open and serving the community with quality care.”
“Prime Healthcare believes that exceptional health care should be part of every community, and we remain fully dedicated to working toward a solution that saves the hospital and saves jobs so that the community continues to receive the very best care that it deserves.”
Bankruptcy court trustee Ron Glass told the Walker County Messenger/Catoosa County News that “conversations with Prime continue. However, they have not submitted a written offer.”
Hutcheson has roughly 500 employees. It’s licensed for 179 beds, but industry officials say it now has only a small number of patients. The nonprofit hospital recently laid off 58 employees and shut down its intensive care unit and other services, leaving just the emergency room and a few other units still functioning.
Hutcheson serves the northwest Georgia counties of Catoosa, Dade and Walker. In March 2014, the hospital said it employed about 900 employees and had an economic impact amounting to over $29 million in annual payroll.
The impact of a closing on patients would be eased due to Fort Oglethorpe’s proximity to Chattanooga. The Tennessee city is nine miles away.
Hutcheson has been under Chapter 11 bankruptcy protection since November 2014. It owed about $80 million at the time of the filing, the Times Free Press reported.
Three years earlier, with large financial losses, the hospital was on the brink of a shutdown, but a management agreement with Erlanger Health System, based in Chattanooga, kept it open. Erlanger sank $20 million into Hutcheson during that management period.
Erlanger later filed suit to retrieve that amount, plus interest and other charges. An expensive lawsuit between Erlanger and Hutcheson is currently on hold.
In the Southern Regional situation, Prime Healthcare Foundation has committed to investing at least $50 million in capital improvements in the hospital over the next five years, including equipment replacement and improvements to the emergency department, and more than $1 million in recruitment of physicians.
Earl Rogers, president of the Georgia Hospital Association, said Thursday that news of a possible purchase of Hutcheson “is a positive sign.”