published Friday, April 15th, 2011

Agreement raises pay for Hutcheson leadership, hints at future layoffs

by Chris Carroll
  • photo
    Staff Photo by Angela Lewis
    Hutcheson Medical Center.

Erlanger Health System will choose Hutcheson Medical Center’s top three executives and pay them a combined $1 million a year, a 58 percent increase over what those positions were paid, according to a document detailing the management agreement between the hospitals.

The document, obtained by the Chattanooga Times Free Press, also spells out a plan to conduct a top-to-bottom personnel review as part of a strategic plan.

“HMC and Erlanger will identify and transition certain employees,” the document states.

“Some may be offered a position at Erlanger, ‘leased’ by Erlanger from Hutcheson, or otherwise contract with one of them,” the document states. “Through December 2012, Erlanger will maintain a list of transitioned employees and endeavor to hire those who match with an appropriate position opening.”

No timeline for a personnel review is identified.

The overall agreement and executive pay plan were approved unanimously April 3 by three Hutcheson boards. That was less than 24 hours before the Fort Oglethorpe hospital laid off 75 workers as part of what officials called “a plan to reduce expenses and improve efficiencies within the hospital system.”

Erlanger spokeswoman Pat Charles acknowledged the document Thursday, but declined to comment. While all relevant boards have ratified the agreement, it has not been signed.


Here are the most recent base salaries paid for Hutcheson’s top executives:

Former CEO Charles Stewart — $331,752

Former CFO Gerald Faircloth — $147,515

Former CNO Debbie Reeves (now serving as interim CEO) — $151,359

Total: $630,626

Source: Hutcheson tax records

“Premature for us to address these questions ... at this point,” she wrote in an email.

The $1 million in executive pay appears to constitute a raise for Hutcheson’s to-be-named top three officials. Base salaries for the positions previously added up to $630,626, according to hospital tax records.

Hutcheson is losing $1 million a month and recently defaulted on a $35 million bond as doctors left and the number of patients dwindled.

In August, Hutcheson hired a consultant to evaluate its 900 full-time and part-time employees, deciding who was expendable based on crowded shifts and overfilled positions.

The management document raises questions about future layoffs in terms of staff duplication at both hospitals. Accounts payable, facilities maintenance and records clerks are among about a dozen positions listed under the heading, “Other Erlanger duties and functions.”

Hospital records show hundreds of Hutcheson employees with job titles identical or similar to those listed on the management document.

When the Chattanooga hospital’s board gave the agreement final approval Wednesday, Erlanger CEO and President Jim Brexler remarked that the “process had concluded without any material changes to our original proposal.”

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Salsa said...

Typical. Give raises to the top men while laying off the actual workers.

April 15, 2011 at 9:05 a.m.
Leaf said...

I guess these were the people blocking the merger. $1 million was the price for them to go away.

Unfair! No matter how annoying I am, my company STILL won't agree to pay me to resign.

April 15, 2011 at 9:57 a.m.
nurseforjustice said...

While on the surface it appears that Salsa is correct, I wonder what is really happening behind the scenes. Sometimes to attract good people to the right positions you have to dangle golden carrots. Please understand I am not saying it is right.

Leaf, you crack me up.

April 15, 2011 at 2:31 p.m.
littleoleme said...

I have heard many average everyday HMC employees complain that they haven't had a raise in 5 years. It would be nice if Chris Carroll could find out whether this is true or not. If it is, then the news concerning higher executive pay while they have the threat of job losses still dangling over their heads has got to be demoralizing.

As for as dangling golden carrots, this is the same logic that Stewart used to get his security clauses in his contract approved along with his year of severance written in. He was taking a substantial risk coming to work for a company in the red, blah, blah, blah.

Pay the next CEO a bonus for an year with an astounding financial loss like Stewart was, Erlanger, and I predict you will have the HMC employees completely beat down.

April 15, 2011 at 2:44 p.m.
jdawgrules2 said...

I think this is crazy. Employees need a raise as well, they are the back bone of the company.

April 15, 2011 at 4:20 p.m.
alohaboy said...

I'm glad my bonds were called a couple of years ago since they defaulted on some recently. I'm sure the county governments down there will make the holders whole.

April 15, 2011 at 4:50 p.m.
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