published Tuesday, September 24th, 2013

Erlanger ends fiscal year $7.9 million in the red

 Chattanooga's Erlanger Hospital is seen in this aerial file photo.
Chattanooga's Erlanger Hospital is seen in this aerial file photo.
Photo by Doug Strickland /Chattanooga Times Free Press.

3-YEAR VIEW

• 2011 - $5.4 million profit

• 2012 - $9.5 million loss

• 2013 - $7.9 million loss

LINCOLN PARK DISCUSSIONS ONGOING

Erlanger board members met with Chattanooga officials in a closed meeting Monday to discuss a 5-acre tract of land behind the hospital that the city hopes the hospital will donate.

The land is part of the Lincoln Park neighborhood -- which is at the heart of an area where the city has long hoped to extend Central Avenue to Riverside Drive.

Berke announced in August that the hospital planned to donate the Lincoln Park property to the city, despite the fact that Erlanger board members had not yet voted on a resolution to approve the donation.

Trustees since have expressed concern that the hospital could not afford to part with the land without compensation.

Mayor Andy Berke attended Monday's Erlanger Planning Committee meeting with his Chief Innovation Officer, Jeff Cannon, who carried a large map depicting the property.

Erlanger officials said the meeting was not open to the media or public because of a state law that allows hospital strategy to be discussed behind closed doors.

Erlanger CEO Kevin Spiegel said the Lincoln Park discussion was considered strategy because it involved long-range planning, but he wouldn't give further details.

He said there would be public discussion and vote on the future of the property during next month's Planning Committee meeting.

Erlanger has ended its 2013 fiscal year with a $7.9 million deficit -- a far cry from the original $10.8 million profit the hospital had budgeted for, but not as bleak as initial projections.

Auditers presented the final numbers for the public hospital, which has struggled financially for the last two years, at the board's Budget and Finance Committee meeting Monday.

Hospital officials had initially estimated the hospital might close the year showing double digits in the red, possibly surpassing 2012's $9.5 million deficit last year.

But it received a sizable bump with a refund from the Internal Revenue Service, which had been collecting FICA taxes from University of Tennessee medical residents working at the hospital, and also from Erlanger.

The IRS determined this spring that it would refund claims for tax periods ending before 2005 -- when new IRS rules went into effect. That meant Erlanger finally received $2.3 million through UT, which the hospital could apply to the last fiscal year.

"That was a big boost for us," said Erlanger CEO Kevin Spiegel.

The year's final numbers cap off a turbulent couple of years at the hospital, including the resignation of former CEO Jim Brexler; layoffs and restructuring; a controversial CEO search process that fell under harsh scrutiny by state legislators; and a $25 million lawsuit filed in July by the hospital's former interim CEO Charlesetta Woodard-Thompson, who was terminated after going on leave.

The hospital's auditers, Pershing Yoakley and Associates, said that, while they considered factoring expenses from Woodard-Thompson's lawsuit into the audit, they ultimately decided against it since arguments were in such early stages.

During 2013, the hospital also provided $85 million in uncompensated care, which includes charity, outstanding TennCare costs and bad debt.

While hospital officials acknowledged that the hospital's final report was mediocre, they praised Erlanger's accounting staff that had correctly tracked the hospital's trajectory through the year, avoiding any surprises.

"Though the numbers aren't pretty, the numbers are accurate," committee chairman Donnie Hutcherson said after the auditers' presentation. "Hopefully when you stand up before us next year the numbers will be black."

Two months into the new fiscal year, the hospital is operating at near-break-even figures.

In August, the hospital reported a $1.5 million deficit, pointing to a drop-off in surgeries and neonatal intensive care unit admissions.

Chief Financial Officer Britt Tabor said the hospital was still making progress reining in expenses like staff overtime and nursing relief pools.

Contact staff writer Kate Harrison at kharrison@timesfreepress.com or 423-757-6673. Follow her on Twitter at @katejharrison.

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