UPDATE: Erlanger files notice to foreclose on Hutcheson Medical - WSMV Channel 4

UPDATE: Erlanger files notice to foreclose on Hutcheson Medical Center; Hutcheson responds

Posted: Updated:
HAMILTON COUNTY, TN (WRCB) -

UPDATE: Farrell Hayes, President and CEO of Hutcheson Medical Center responded to the Erlanger foreclosure news late Thursday:

“In negotiating a settlement over the management contract, Hutcheson made an offer that would have allowed for full repayment of the $20 million loan to Erlanger. It is shameful that Erlanger, which just posted a huge profit this week, would refuse that offer and instead seek to close a small community hospital.”

PREVIOUS STORY: Officials with the Erlanger Health System have started formal foreclosure proceedings against Hutcheson Medical Center as part of the effort to recoup moneys owed to Erlanger.   
 
Hutcheson board members received notification on July 3, along with a copy of public Notice of Sale submitted to Catoosa and Walker County legal publications. The sale under the security deed is scheduled for the first Tuesday in August 2014 on the steps of the Catoosa County Courthouse in Ringgold, Ga.
 
Under the terms of the management agreement, Erlanger agreed to provide management services to Hutcheson as well as issue a line of credit for $20 million in an effort to save the failing facility.  
 
The line of credit was secured by the real property and improvements on Hutcheson's main campus in Fort Oglethorpe and further guaranteed by Walker and Catoosa Counties, up to $10 million per county. At the time Erlanger signed this agreement, Hutcheson was losing $1.5 million a month.
 
In May 2013 Erlanger loaned Hutcheson additional money to assist the hospital in meeting payroll obligations.  In November of 2013, Hutcheson terminated the management agreement with Erlanger.  Since that time Erlanger has attempted to come to a mutual agreement as to an effective termination and timely repayment of all moneys owed by Hutcheson to Erlanger.     
 

Meanwhile, Hutcheson has responded to Erlanger's foreclosure effort.  In a statement released shortly after Erlanger's foreclosure announcement, Farrell Hayes, President and CEO of Hutcheson said "In negotiating a settlement over the management contract, Hutcheson made an offer that would have allowed for full repayment of the $20 million loan to Erlanger. It is shameful that Erlanger, which just posted a huge profit this week, would refuse that offer and instead seek to close a small community hospital.

Foreclosure does not necessarily mean that Hutcheson will cease operations as the community's hospital.  On the contrary, the purchaser at the foreclosure sale will make the decision as to whether the facility remains or does not remain as Hutcheson Medical Center.  Regardless, Erlanger remains committed to meeting its longstanding and continued support of the health care needs of northwest Georgia.

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