Another rural hospital going out of business

A rural hospital in northwest Georgia, burdened by a heavy debt load and large financial losses, is set to close Dec. 4.

Hutcheson Medical Center in Fort Oglethorpe would be the fifth rural Georgia hospital to shut its doors since 2013.

Hutcheson Medical Center
Hutcheson Medical Center

A bankruptcy court judge issued the order for the closure this week, the Chattanooga Times Free Press reported.

Hospital employees were told of the closing date on Thursday, according to the Walker County Messenger/Catoosa County News.

The Hutcheson CEO, Farrell Hayes, declined comment Friday on the closure, referring GHN to the trustee appointed by a bankruptcy court judge to oversee hospital operations during its Chapter 11 reorganization. Trustee Ron Glass could not be reached for comment.

Hayes said Hutcheson has roughly 500 employees. It’s licensed for 179 beds, but industry officials say that it 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.

Walker County
Walker County

Jimmy Lewis, CEO of Hometown Health, an association of rural hospitals in the state, said Friday that the Hutcheson closure ‘’is a huge economic development event.’’ When a community loses a hospital, he noted, it  becomes much harder to attract and retain businesses.

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.

“This industry is an extremely complex, changing industry that requires a new mind set and transformation,’’ Lewis said. “If they don’t do it, they close.

“There’s definitely the potential for more closures.”

Hospital industry officials say Georgia’s decision not to expand Medicaid under the Affordable Care Act has hurt rural health care. Hospitals in rural areas tend to treat many uninsured people, incurring heavy losses. If more low-income residents were covered by Medicaid, these hospitals would be guaranteed more revenue.

Gov. Nathan Deal and legislative leaders have so far stood resolutely against Medicaid expansion, saying it would be too costly for the state. Deal has sought to address the plight of struggling hospitals, pursuing a rural hospital stabilization project involving extra funding for four areas of the state.

Lewis said Hutcheson patients won’t be as badly inconvenienced as people in other rural areas losing hospitals, because of Fort Oglethorpe’s proximity to Chattanooga. The Tennessee city is nine miles away.

The Fort Oglethorpe hospital 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.

Hutcheson is close to selling its nursing home, which would allow its residents to remain where they are.

Maybrook Healthcare has offered to buy the nursing home for $7.2 million, according to the Times Free Press.