MARYVILLE, Tenn. — Blount Memorial Hospital's CEO warns that if the Blount County Commission doesn't approve a debt waiver plan, the bank could call the hospital's bonds, leading to the closure of the county's only hospital.
"We would certainly try to work with them in a way that they didn't, but if they chose to, we would have very little cash left, and we would be at risk of closing the hospital," Dr. Harold Naramore, the hospital's CEO, said.
Federal court records show the hospital has $57 million in bonds, or debt, backed by Blount County. Dr. Naramore said the bank has bond covenants, or tests, to make sure the hospital can meet its obligations.
First, the bank's net income must be equal to at least 110% of the debt payments for the year. As of June 30, 2023, an email from the Blount Memorial Hospital controller said the ratio was 104.3%. As of Aug. 31, 2023, the email said the ratio is 130.4%.
"That is a reflection of the efficiency we're managing the hospital with," Naramore said. "We've cut supply costs, we are constantly working to improve our financial position."
The second test requires the hospital to maintain 90 days of cash on hand. Naramore said the hospital is not meeting that requirement.
First Horizon Bank agreed to give Blount Memorial a waiver on the bond covenant, provided the hospital moves $30 million from an investment account to an investment account the bank controls, the hospital's CEO said.
The Blount County Commission would have to bless the proposal for the waiver, Naramore said. The item is not on the commission's agenda, so they would have to call a special session.
Blount County Commissioner Misty Davis, an outspoken critic of the hospital's administration, said in an email to 10News she would not vote to approve the plan for the waiver so long as Dr. Naramore is still CEO of the hospital.
Separately, to meet the bond covenant without a waiver, Naramore said Blount Memorial is trying to sell its MorningView Village property in Maryville. A letter from Naramore to Blount County Mayor Ed Mitchell said Ocoee Foundation, Inc. has agreed to purchase the property for $22.8 million. The sale could take months, Naramore said.
The Blount Memorial CEO said Ocoee Foundation wants Blount County to approve the sale before it goes through.
"The people on the other side of the transaction just want to be assured that when they make a purchase of this magnitude and invest so much in it, they don't have any ongoing legal issues about ownership," Naramore said.
Last year, Blount Memorial tried to sell a property in Alcoa to meet its bond covenant. The attempted sale set off a series of disagreements, and lawsuits in state and federal court, over control of the county's only hospital.
The Blount Memorial Hospital board is made up of appointees from Blount County (4), Maryville (2), Alcoa (2) and Maryville College (1). Over the past year, Blount County has tried to change the makeup of the board. Members, with more than 90 combined years of experience are now off the board. Six new members were appointed this year.
"To facilitate a harmonious resolution, certain conditions must be met, including seating county-appointed board members, dropping the federal lawsuit against Blount County, and adhering to the revised Private Act," Davis said in the email. "I want to see a new Hospital Board of Directors overseeing the use of any new cash."
Blount County Mayor Ed Mitchell did not respond to a request for comment.