The announcement of public hearings on the new property tax rates in Walker County from the Messenger reminds its citizens of the additional 0.14% of property value assessment imposed for Erlanger payback on a loan guarantee back in 2011. This “Erlanger tax” did not start with the present administrators of either entities, yet is being borne by Walker County citizenry in the fallout of a battle in the past where unreasonable claims were made and an offensive legal defense clashed in federal court.
Several factors may have lead to this. A prolonged battle with the previous Walker County commissioner and her legal staff making public charges of Erlanger's patient diversion sealing the failure of old Hutcheson, causing Erlanger to have to defend this debt dismissal request in federal court in Rome. Erlanger's argument in court prevailed. Then, armed with this, the next administration at Erlanger came against the new Walker County commissioner who had just inherited the large debts of the county and forced him to deal with a justified Erlanger pushing its edge given them by the court to collect this additional debt.
Payment schemes were negotiated over some very tense times, according to the newspaper articles written about this. In early January 2018 the Times Free Press, The Chattanoogan and the Walker Messenger and other news outlets reported a settlement between Erlanger and the beleaguered Walker County commissioner where Erlanger would receive payment of $8.7 million over three years rather than a lump-sum payment the county just did not have and feared trying to raise. To raise this the commissioner had to impose the 0.14% property assessment on the citizens of Walker County. It has made property for sale in Walker harder to sell and placed a burden on the property owners and residents of Walker County. Catoosa County had settled for $6.5 million in negotiations with Erlanger back in 2014, depleting much of their cash reserves, but avoiding the drawn-out legal battle that Walker County had pursued. Dade County had opted out of helping old Hutcheson because of the financial risk.
One issue that had escaped the insight through all of this appeared to be that Erlanger itself spent the $21 million Erlanger loan underwritten by Walker and Catoosa counties. To our recollection Erlanger blew through the $ 21 million in about six months, back in 2011, in its management of old Hutcheson.
While it is unfortunate that Erlanger was not able to turn around a failing hospital, they should have been astute enough to realize the depth of the job before they took it. The counties took risk on Erlanger being able to manage old Hutcheson and ended up losing it.
It appears that the citizens of Walker and Catoosa counties are double losers or even triple losers when you consider the reserves that were applied to the hospital to prop it up while management failed to reverse the downward spiral begun many years before.
Though Erlanger attempted, Erlanger should accept some of the blame in this failure. They would have accepted the credit if their attempt to turn old Hutcheson around had it been successful. Erlanger should accept the consequences of its failure to save the hospital for the counties as well. This was not a risk-less endeavor Erlanger entered into. Those hearing Erlanger's proposals did not have all the understanding that may have been needed to judge Erlanger's abilities in this difficult situation. Erlanger had benefit from its endeavor with increased referral and name recognition during its time at old Hutcheson. Erlanger should not expect to have tried this risk free and have the citizens of Walker and Catoosa counties absorb all the risk for this failure.
The article in the Times Free Press from January 8 notes that Erlanger's net operating revenue was $886.4 million and referred to the payment from Walker County to be a “small bump” in their overall revenue. Since then, Mr. Spiegel reported that Erlanger will have operating revenue that will exceed $1 billion.
Jack Studer,, the chairman of the board of the Chattanooga Hamilton County Hospital Authority, is quoted in the TFP and Chattanoogan articles in January 2018 that “North Georgia is an important part of Erlanger's business” and hoped that the “people would choose Erlanger.” Erlanger had hoped to build a surgery center in North Georgia, but was unable to obtain a certificate of need because of opposition. Erlanger had hoped to build a Cancer Center in North Georgia. The North Georgia Times Free Press two weeks ago reported on its front page that Erlanger has given up on this as well because of failure to establish certificate of need and from local opposition. We believe that the continued pursuit of the repayment of the loan that Erlanger itself spent from the citizens of Walker County will continue to breed bitterness from the people of Walker County and blunt credit for much of the good Erlanger is doing for the region as of late.
We appreciate and acknowledge CHI Memorial's attempt to reestablish basic hospital care in North Georgia with its purchase of the property and implementation of service in the old Hutcheson. We appreciate Erlanger's previous administration's attempt to preserve the local citizen owned hospital. We recognize the effort Erlanger had to use to justify itself against the charges of its destruction of Hutcheson in the courts and prove its point. We believe that Erlanger would do well to offer forgiveness of this “small bump” in revenue and take the burden off the backs of Walker County residents for these last two “Erlanger tax” payments. We see similar extension of grace along these lines as Erlanger is very familiar with forgiveness of debt for much of the care it gives. Continued pursuit of this collection seems inconsistent with Erlanger's legacy.
The Walker Catoosa Dade Medical Society