published Tuesday, July 24th, 2012

Erlanger Health System raises linked to savings

Erlanger hospital in Chattanooga
Erlanger hospital in Chattanooga
Photo by Ashlee Culverhouse.
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Some Erlanger Health System employees may see a bigger paycheck by the end of the year -- if first they can help get their hospital back into the black.

The public hospital board's finance committee approved a resolution Monday evening to fund salary increases and market adjustments for employees based on "gains from the expected improvements."

"This is another way of including our employees in solutions that provide a team approach," Erlanger interim CEO Charlesetta Woodard-Thompson told board members when she asked for approval of the resolution. "We want to make sure everyone has a buy-in and a stake in this project."

Erlanger employees have not gotten a raise since October 2010, spokeswoman Pat Charles said.

The hospital saw deep financial losses in the fiscal year that ended June 30. Final financial numbers will not be released until September, but through the end of May, the hospital had lost about $15 million.

The hospital enacted a labor management plan earlier this year that included laying off about 3 percent of the hospital's employees.

In July, Erlanger brought in a management consultant team to look at the hospital's operations, partially because the hospital expects to be out of compliance with its bond covenant requirements.

As the consultants find ways to cut costs and implement savings, part of any financial gains would be used to improve employees' salaries, Woodard-Thompson said.

She said the raises first would go to employees whose salaries lag behind market values, such as nurses. The first raises should be issued before the end of this fiscal year, Woodard-Thompson said, but she declined to give an exact timeline.

"Our employees have been so loyal and dedicated, we want to say to them, 'We will take care of you first,'" Woodard-Thompson said.

Chief Financial Officer Britt Tabor said he thinks this is the first time the hospital has linked raises to the hospital's financial performance.

"This gets a buy-in we've never exercised before," he said.

The finance committee approved the resolution in a consent vote, which means the full board will not vote separately on the issue.

In a different meeting Monday, officials at Erlanger at Hutcheson in Fort Oglethorpe reported its lowest losses in 21/2 years.

Officials are hopeful the North Georgia public hospital will break even by January 2013.

During a finance committee meeting Monday, Hutcheson Chief Financial Officer Farrell Hayes reported an increase in daily patients, total surgeries, emergency room visits and outpatient visits compared to June 2011.

Hutcheson posted a loss of $171,000 in June, an improvement over a budgeted loss of $813,000. It is the best numbers the hospital has seen since January 2010, Hayes said.

Hutcheson CEO Roger Forgey said Hutcheson recently has not had to draw from the line of credit Erlanger Health System extended to the hospital after Erlanger took over management in May 2012.

"We would like to not report a loss, but we are very happy with this improvement," Forgey told trustees.

Contact staff writer Mariann Martin at mmartin@timesfreepress.com or 423-757-6324.

about Mariann Martin...

Mariann Martin covers healthcare in Chattanooga and the surrounding region. She joined the Times Free Press in February 2011, after covering crime and courts for the Jackson (Tenn.) Sun for two years. Mariann was born in Indiana, but grew up in Pennsylvania, Tennessee and Belize. She graduated from Union University in 2005 with degrees in English and history and has master’s degrees in international relations and history from the University of Toronto. While attending Union, ...

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