County Auditor Bill McGriff said he does not consider that Erlanger Health System is yet facing a "crisis," but he said the situation "will be serious if the present deficit trend continues for several more months."
Mr. McGriff, who is on the hospital's financial review committee, said Erlanger is mainly dealing with "a revenue problem." On the spending side, he said, "It appears they have cut about as far as they can."
Erlanger has lost over $17 million this fiscal year, including more than $4 million last month.
Mr. McGriff said the revenue problem appears to be related to a number of physicians leaving the hospital "and going to Parkridge and Memorial."
He said, "They may have priviliges with several hospitals, but they are likely to do most of their surgeries where they have a home base."
The auditor said it is important that Erlanger remain viable. He said, "Erlanger is a very valuable public asset to the people of Chattanooga and Hamilton County. It provides care to a lot of individuals not served by other local hospitals."
He said, should the dismal financial results continue, Erlanger would not be declared in default of bond covenants until about September, when the auditing of the fiscal year ending June 30 is complete.
Mr. McGriff noted that Erlanger was in default on its bonds once before - when it was assessed a $40 million fine by federal regulators several years ago. He said in that case consultants were called in to make recommendations to get the hospital back to financial health.
He said by the hospital hiring its own consultants now it may "be acting in a pro-active way" as far as the consultants are concerned.
Mr. McGriff said when the Hospital Authority was set up it is his understanding that Erlanger was no longer an asset of the city and county. He said should Erlanger fail, that the city and county may have "the right of first refusal" on its assets. He noted that holders of hospital bonds also would be involved.