published Friday, July 26th, 2013

Erlanger Health System to give raises

The Erlanger Baroness campus.
The Erlanger Baroness campus.
Photo by Staff File Photo.
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FISCAL YEAR 2012-13

* July: $1.8 million loss

* August: $2 million profit

* September: $906,000 loss

* October: $730,000 profit

* November: $726,527 profit

* December: $1.1 million loss

* January: $541,232 profit

* February: $2.5 million loss

* March: $4.9 million loss

* April: $249,000 loss

* May: $197,950 loss

* June: Unreported until audit.

Next year will be full of uncertainty for Erlanger Health System as it adjusts to changes with the new health care law and seeks to change its governance structure.

But Erlanger's new CEO says he is certain of one simple fact: The hospital's nurses need to be paid more.

"You can run a hospital without me. You can't run a hospital without the nurses," Spiegel said Thursday. "They're the ones actually taking care of people."

All Erlanger employees except executives will see a 2 percent raises for the first time in three years next year, and bedside nurses will see 3 percent raises according to the hospitals 2013-14 fiscal year budget passed Thursday.

The raises will cost the hospital $2.6 million.

But Spiegel's outlook for next year also raises questions about other groups of Erlanger's staff, including housekeeping, food service and in-campus transportation.

Spiegel announced Thursday that he planned to bid out contracts for those services in the months ahead.

The budget approved by the board features a $2 million operating income budget, but ultimately projects $4.6 million loss for the hospital's bottom line next year after interest expenses and fair market accounting.

Even with such a modest goal for next year, the hospital will have to make up millions since it expects to end this fiscal year with a significant deficit. As of May, the unaudited figure was nearly $10 million in the red.

"This is a very, very challenging budget, but it's significantly more realistic," Spiegel said. "I believe we can achieve this budget."

Erlanger's board of trustees approved the budget unanimously, with no discussion.

The patient volume outlook for the hospital next year is optimistic, with a projected uptick in admissions, visits to the hospital's new ER in East Brainerd, and added reimbursements from the new federal insurance exchange networks.

But Chief Financial Officer Britt Tabor said this year's budget process was riddled with changes and questions stemming from the implementation of the Affordable Care Act.

Medicare payments to the hospital were cut by nearly $2 million. And much could hinge on whether or not Tennessee decides to expand its Medicaid program.

"It was a lot harder this year with all of the uncertainty," said Tabor.

Amidst all of the talk of flux, Spiegel spent the first half hour of Thursday's board meeting establishing footing, with a power point describing Erlanger's current financial status, along with his plans to tighten the hospital's belt.

The hospital is severing its contract with consultants PricewaterhouseCooper, is cutting its number of memberships and sponsorships, and is evaluating positions throughout the company and its benefits structure.

Spiegel also highlighted a long list of future goals for the hospital, including an Erlanger Cancer Center, a new Children's Hospital, primary care acquisitions, hospital expansions and potentially establishing joint practice plans with the University of Tennessee College of Medicine.

He also discussed his hopes to change the format of the public hospital's governance and obtain 501(c)3 nonprofit status in the coming year.

Contact staff writer Kate Harrison at kharrison@timesfreepress.com or 423-757-6673.

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