The fate of Copper Basin Medical Center now rests with the county commission. The Copperhill Council voted to co-sign a $1.4 million line of credit for Copper Basin Medical Center, with the city to be responsible for 25%. Ducktown has already approved a similar resolution, and the county will be asked to co-sign for 50% of the loan on Aug. 28.

Copperhill’s action was approved with three votes -- Mayor Herb Hood, Kathy Stewart and Hal Williamson. David Herring said he supported the hospital but there was too much information to absorb and vote on at the meeting. Mike Williams has resigned his position with the city.

Attorney Jim Johnstone presented the background that brought the hospital district trustees to the current situation. He said they have not been getting information from the corporation that is currently leasing the hospital and the trustees were unaware of a $3.5 million debt. He said they felt the lease was in default and had planned to go to court if necessary. The current plan is a management agreement with Brim, a company that specializes in helping not-for-profit hospitals. If the hospital fails, he said, the county, Ducktown and Copperhill will be responsible for that debt. “Nobody wants that, and everybody wants to keep the hospital,” he said.

For Brim to be effective, he said, there needs to be a $1.4 million line of credit to catch up on unpaid bills, get caught up on hospital insurance for employees, and open the surgery center. He said local banks are ready to provide the line of credit as long as the hospital get the local governments to co-sign.

Johnstone and John Freeman, Brim’s Regional Financial Officer, said out-patient surgery is a key to turning around the financial picture at the hospital. There is a $267,000 grant available that must be matched, and the plan calls for starting with a $60,000 match to get the needed equipment.

“We want to work it out,” Johnstone said, adding the current corporation would move out and the trustees would contract with Brim to manage the hospital. He said he has a contract to work with the hospital, serving as liaison and keeping the lines of communication open.

Freeman presented financial information based on unaudited information provided by the hospital. He said they are projecting a loss for the fiscal year, which ends Sept. 30, but there could be a surplus in the next fiscal year under Brim management. Key assumptions to make that possible include opening the surgery center, an increase in volume, better patient management, and savings on purchases, which will be possible once the past due bills are paid. He said he was very conservative in estimating surgery patients.

Freeman said the bulk of the line of credit will be used to pay down the debt, adding they hope to negotiate with vendors to accept less than full payment.

There will be a big cost increase in payroll and purchased services. Brim’s management fee is projected to be $180,000, with another $20,000 for travel expenses, although the long-term fee is still to be negotiated. The trustees also have a contract with Johnstone.

Keith Ballew, who once served as hospital administrator and is now on the Board of Trustees, said the hospital can’t survive without the proposed plan. “It’s better than bankruptcy,” he said. He said he would be willing to accept more of the debt than he was willing to take a year ago if Mike Stevenson, CEO of the hospital corporation, gets his audits done and turns the hospital over. If Stevenson goes into bankruptcy, he said, it will take $3 million to get the hospital up and running.

Ballew said when Stevenson took over from Grady Scott in 2002, there was a $1.5 million surplus, adding he did not know why the hospital has gone downhill so quickly. He said Brim is the best in the business for nonprofits. “I think it’s our only hope.”

Trustee Joan Pack said the community can’t survive without the hospital. She said there’s no comparison between a $1.4 million line of credit versus a $3.5 million liability. Bea Tallent said they were told the debt was $1.3 million when the new lease was signed.

Pack said Brim has a three-month contract now and will tell the trustees anything they need to know about what has to be done to turn the hospital around. Then they will look at a long-term management contract. She said they think they can pay the loan off in 3-4 years. Pack added they can’t negotiate with creditors until there are funds available.

City council member Hal Williamson said he thought the projected use of the surgery center was low, noting that Life Care Center sends 12-16 patients a month to Cleveland for outpatient surgery. “Why not do it here?” Pack said most local doctors send more than two a week to Cleveland, adding the Cleveland doctors who come to the Basin have said they will do surgery there if the facility is adequate.

David Herring asked what would happen if it doesn’t look good after Brim’s first three months. Johnstone said the 90 days will give them time to get settled in with a CEO and Chief Financial Office so they can hit the ground running. They will negotiate the long-term cost. Herring asked if there is a ceiling on that amount and Johnstone said it’s negotiable. Pack noted there is a projected amount in the projections for the coming year.

Asked about payments due to the hospital, Freeman said they will determine how much is collectible and work with a collection agency. He noted some of it is charity care. He added the financial people working at the hospital are good but need leadership and training.

Hood asked Dr. William Lee, long time physician in the area, what he thought. Lee said “We’re at a point where we have to do something or throw in the towel. This is the something.” He said he knows it seems almost impossible but he is sure it can be done “if we all pull together, stay in unison and push hard.” He said they can tell a lot in 30 days.

Hood said the services his family has received have been good. “We have to be positive,” he said, suggesting the city do its part.  Williamson made the motion, which was seconded by Kathy Stewart.