published Saturday, April 16th, 2011, updated April 16th, 2011 at 4:21 p.m.

Erlanger disputes salary figures


by Chris Carroll

Erlanger Health System officials on Friday said compensation packages for Hutcheson Medical Center’s top three executives are flexible and will not amount to a combined $1 million per year.

“There was never a plan to pay three executives more than the former CEO, CFO and CNO of Hutcheson Medical Center,” Erlanger President and CEO Jim Brexler said.

Brexler was responding to a Chattanooga Times Free Press story revealing that a summary of the newly approved management agreement between the two hospitals states Erlanger will select Hutcheson’s chief executive officer, chief financial officer and chief nursing officer and pay them a total of “approximately $1 million per year.”

Base salaries for the positions previously added up to $630,626, according to Hutcheson’s tax records.

The Fort Oglethorpe hospital’s governing board approved the management agreement with Erlanger a day before Hutcheson announced 75 layoffs.

The 48-page management agreement makes no reference to specific salaries for Hutcheson’s to-be-named executives. But trustees from the Hutcheson boards that approved the agreement said Erlanger executives referenced the $1 million figure during negotiations.

“It sounded harsh to us,” said Corky Jewell, a trustee from the Hospital Authority of Walker, Dade and Catoosa Counties. “But we were told it may end up costing that much to hire top-notch hospital administrators.”

William Craig, a former Hutcheson Medical Center Inc. board member, said he remembers the $1 million figure as being concrete.

Erlanger officials declined to comment Friday on the Hutcheson board members’ remarks.

Hutcheson officials provided the Chattanooga Times Free Press a copy of the management agreement Friday under Georgia’s Open Records Act. Erlanger refused to give the newspaper a copy on Wednesday after the Chattanooga hospital’s board of trustees unanimously approved it.

Work force review

Members of the Hutcheson boards relied on the summary document when approving the management agreement during a called meeting on a Sunday afternoon. Less than 24 hours later, the hospital announced 75 layoffs as part of what officials called “a plan to reduce expenses and improve efficiencies within the hospital system.”

Hutcheson is losing $1 million a month as well as much of its physician and patient base.

The agreement also includes language about a top-to-bottom work force and service review at Hutcheson as part of a strategic plan. The document states that Hutcheson and Erlanger will “transition those employees for which there is no foreseeable need at the hospital,” a possible prelude to more layoffs.

Erlanger "shall have no responsibility for severance pay" for Hutcheson employees, the agreement states. Hutcheson will be charged with providing severance packages to their own employees in the event of layoffs.

Through December 2012, Erlanger will keep a list of terminated employees and try to hire those who fit in job openings, according to the agreement.

“Nothing herein, however, is intended to or otherwise shall require Erlanger to hire any such person(s) or to give any rights to such person(s) to be offered employment with Erlanger,” the agreement states.

Erlanger may modify “one or more of the core services” at Hutcheson, including its long-term care facility, its hospice program and outpatient services known as Hutcheson on the Parkway, according to the agreement.

Erlanger investment

Erlanger will extend a $20 million line of credit to Hutcheson to keep the hospital afloat. But without stipulating an exact figure, the management agreement indicates more financial investment than that.

Under the agreement, physicians will be directed toward Hutcheson “at Erlanger’s expense, including bearing all costs of practice-related expenses, staff expenses and systems costs,” according to the agreement.

The summary document used by Hutcheson boards to approve the agreement estimates physician recruitment costs at $15 million.

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littleoleme said...

That's the trouble having these negotiations behind closed doors. If it wasn't documented in the agreement, then the issue of the $1 million executive pay just boils down to "he-said, she-said." Since this article has board members willing to go on the record to back up this figure, I tend to believe them despite the denials coming from Erlanger.

I am appalled that the agreement does specifically deny any responsibility for severance pay for employees that may be "transitioned." C'mon, Erlanger, if you are willing to pay a total sum of $1 million dollars a year for executive pay, at least be willing to cough up some money for severance pay for the people that are going to be losing their jobs. It may not be required by law to do such, but it is just the right thing to do.

Any HMC employee who is still wide-eyed with hope and the belief that Erlanger is coming to "rescue" them and save their jobs, needs to reread this article and think again.

April 16, 2011 at 8:08 a.m.
hcirehttae said...

“It sounded harsh to us,” said Corky Jewell, a trustee from the Hospital Authority of Walker, Dade and Catoosa Counties. “But we were told it may end up costing that much to hire top-notch hospital administrators.”

I JUST LOVE quotes like this. "We were told..." -- somewhere, at sometime, by somebody wearing a black mask who ran out of the room after saying it. The myth is that "you just can't get good help nowadays" at the top of an institution unless you pay them 50% more than the previous people, as well as offering them a no-fail contract with full buy-outs and bonuses, just in case the whole thing goes south and they have to be fired after a year or two.

What a load of malarkey! People who complain about $30,000-a-year teachers having a "job for life" (despite being mediocre) need to focus their laser beams on these C*O's who are not only mediocre, but dishonest, corrupt, and incompetent; and yet corporate boards negotiate these fail-safe contracts with the same cohort of their chummy buddies again and again, pillaging the American middle class, who end up paying all the bills through totally opaque fees and taxes.

April 16, 2011 at 10:29 a.m.
Leaf said...

I believe the original article said they were paying the OUTGOING CEO and CFO a bunch of golden parachute money, not the incoming ones. The Erlanger officials seem to be redefining the prior criticism and then refuting what nobody said in the first place.

April 16, 2011 at 12:42 p.m.
mthompson332 said...

No, the original article talked about incoming CEO, CFO, CNO.

April 16, 2011 at 1:35 p.m.
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