Erlanger Health System's board of trustees approved an amendment to its bylaws Thursday to prohibit board members from entering into employment or contractual arrangements with the hospital for at least two years after serving on the board.
It will allow exceptions for physician trustees who practice at the hospital and are appointed to the board by either the Hamilton County mayor or the Tennessee Legislature, as well as the medical staff chief, who also serves as a trustee.
The move was a response to a bill filed in January by state Sen. Todd Gardenhire, R-Chattanooga, which he said aimed to prevent conflicts of interest between hospital authorities such as Erlanger and their governing bodies.
The Chattanooga-Hamilton County Hospital Authority, commonly called Erlanger, is governed by an 11-member board of trustees who serve four-year terms without compensation and may serve for no more than eight consecutive years.
Gardenhire's bill would have eliminated all financial ties between public hospitals like Erlanger and trustees, including those who are doctors at the hospital, until at least a year after their tenure ended. However, the bill was later pulled in order to prevent unintentional harm and give trustees time to address the problem on their own, Gardenhire told the Times Free Press in April.
If the bill had become law, the three physicians currently on the board - Drs. James Bolton, Phil Burns and Blaise Baxter - would've been affected.
Sheila Boyington, a trustee and chairwoman of the board's legal committee, said during a meeting Monday that the bylaw changes came with two main points in mind.
"We need to have medical expertise on our board, period. We're a hospital," Boyington said, speaking of keeping physicians on the board. "The second piece is also to make sure that those individuals are not using undo influence or have controlling interest in medical companies and/or for themselves to gain employment using their board position."
Hospital records obtained by the Times Free Press in April revealed that Erlanger executive management held contract discussions last year with former trustee Jack Studer, who at the time was board chairman, and current trustee Baxter.
While the board's old bylaws contained a conflict-of-interest clause, the former section pertaining to employment deals between the hospital and trustees did not consider contracts and prohibited employment only for six months after serving.
On Monday, Boyington said the legal committee wanted to go a year more than Gardenhire's proposed legislation to demonstrate "good faith" to the delegates, and because it was "the right thing to do."
"We're serious about this, we understand your concern and we're responding," she said.
She added that the board also already has a disclosure process that helps mitigate conflicts of interest.
On Thursday, the board approved a second resolution to sign a three-year service agreement between Erlanger and Tennessee Oncology for radiation oncology services.
University Oncology and Hematology Associates now provides the service, but Tanner Goodrich, vice president of operations for Erlanger, said two radiation oncologists had recently left the group and the group wasn't interested in submitting a bid for a new contract.
"We had proposals from three different groups and ultimately settled on Tennessee Oncology as a group that had local history and the ability to provide services quickly and effectively," Goodrich said, adding the group will work with Dr. Frank Kimsey, who is now at University Oncology and Hematology Associates and practices at Erlanger's main campus.
The new contract will cost Erlanger about $110,000 less annually than the previous one.
Contact staff writer Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.