Hutcheson close to sale, CEO says

Sept. 03--ROME, Ga. -- Hutcheson Medical Center CEO Farrell Hayes hopes an offer to save his hospital will arrive next week.

Hayes testified during a U.S. Bankruptcy Court hearing on Wednesday that he believes a company will make a formal offer within about seven days. His attorney, Robert Williamson, said during the same hearing that 10 companies are interested in buying the hospital and four other companies are considering purchasing Hutcheson's nursing home.

He said one company is looking to buy both complexes for about $20 million. Hayes testified he thinks that offer will come next week, based on his conversation Tuesday night with his investment bankers at Guggenheim Securities.

"I'm hopeful that we're moving toward this sale right now," Hayes said during a hearing Wednesday to determine whether Hutcheson should continue to have bankruptcy protection.

U.S. Trustee Martin Ochs argued that Judge Paul Bonapfel should end Hutcheson's Chapter 11 bankruptcy case because the Fort Oglethorpe hospital has lost an extra $6.3 million since filing for bankruptcy in November. Ochs also said patient care at the hospital could put lives at risk.

Bonapfel did not rule on the motion, pushing the remainder of the hearing back to Friday.

On Wednesday, though, Williamson argued that Hutcheson should stay in bankruptcy for the next three or four months. Its officials hope a buyer will purchase the hospital despite its estimated $80 million of liabilities. Lawyers for a committee of unsecured creditors and Regions Bank backed Williamson.

Regions, which was owed about $30 million from Hutcheson as of December, will cover some of the costs of bringing in a second trustee to handle the hospital's finances. The bank will also pay off some of the money owed to employees for, ironically, health care.

Williamson told the judge Wednesday that ending the bankruptcy case would create pandemonium. Hundreds of people and companies who have been waiting years for Hutcheson to pay them back would race to the courts, demanding their money back immediately.

Erlanger Health System, which lent Hutcheson $20 million in 2011, could move to foreclose on the hospital.

"The resulting chaos will almost certainly close the hospital," Williamson said, resulting in the loss of 700 jobs, as well as leaving 20 to 30 patients without a hospital.

Ochs questioned that second figure Wednesday. He called Susan Goodman, the court-appointed ombudsman for the case, to the stand, and she told the judge that between seven and 11 patients were in the hospital at different points Tuesday.

And of those few patients actually at Hutcheson, Ochs said they have been put at risk by a series of failures. He compared problems at the hospital to the Whack-A-Mole arcade game.

"One problem would drop down," he said, "and another would pop up. Over and over."

Goodman testified that several nurses left Hutcheson earlier this year after hospital administrators failed to make their insurance payments. She said she has received anonymous calls from people claiming to be employees. They ask her for advice about how to get the hospital to pay their insurance and tell her that administrators will fire them if it becomes known they are talking to her.

Goodman listed other problems at the hospital. The analyzer that examines patients' blood showed an error code in August. The MRI machine was not working around the same time.

Two CT scanners were also out of service earlier this year. Nurses had to buy their own office supplies.

The air filter needed to be changed in January, but nobody did anything for about four months.

She said a lab employee told her that, at one point this year, there was no blood or plasma on hand because the hospital failed to pay its bills. Goodman described the employees as being in "bankruptcy fatigue," worried that they won't get paid or will just outright lose their jobs.

"There is a heaviness that hangs over (the hospital)," she said.

Dr. Lori Emerson, the medical director of the lab and Hutcheson's physician of the year in 2011, testified that the hospital is often short on supplies, something that has become more frequent since the hospital filed for bankruptcy in November.

But when he testified, Hayes said Emerson's concerns are overblown. He said all labs run short on supplies and have to borrow from nearby hospitals. In fact, he said, the problem actually occurs less frequently since the bankruptcy filing.

Dr. Tim Ashburn, the hospital's chief medical officer, added Wednesday that Hutcheson is just as strong a hospital as it was last year.

"I have seen no decline," he said. "That is due to the dedicated staff at Hutcheson. The experience of the staff is second to none."

Williamson told the judge that the hospital recently cut expenses by laying off 50 employees, lowering some doctors' and administrators' salaries, suspending the women's center and shutting down a clinic in LaFayette.

Asked why the hospital waited nine months after declaring bankruptcy to make these moves, Hayes admitted he should have acted sooner.

"Hindsight's better than foresight," he said.

At the end of the hearing, which featured a lawyer for Hutcheson, a lawyer for Erlanger, a lawyer for Regions, a lawyer for Walker County, a lawyer for Catoosa County and a lawyer for a group of unsecured creditors, Bonapfel told all the men in suits to focus more on solutions than arguing with each other.

"We've heard a lot of evidence about how the ox is in the ditch," the judge said. "We haven't heard anything about how we're going to get him out."

Contact staff writer Tyler jett at tjett@timesfreepress.com or at 423-757-6476.

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