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Tuesday, May 20, 2008

Chattanooga: Erlanger debates IT change-up

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A resolution to outsource Erlanger hospital’s information technology services to a national company stirred some heated discussion, by budget committee standards, at the committee’s meeting Monday night.

The resolution was not given preliminary approval at the meeting, at the behest of committee members who felt the eight-year contract with hospital services company PHNS left too many questions unanswered.

“This is a pretty big change in this hospital,” said committee member former state Sen. Ray Albright. “There’s an awful lot of stuff still not filled in (in the contract) and I don’t know when it’s going to be filled in. ... Seems to me like we’re going to approve it before we really know what’s in it and that concerns me a great deal.”

Erlanger executives agreed to take time this week to answer questions from concerned committee members — in advance of the full board of trustees’ vote on the resolution on Thursday — to clear up any qualms about the contract, which would cost the hospital $1.47 million in net expenses over the next eight years.

ERLANGER’S APRIL FINANCES

At Erlanger’s budget and finance committee meeting, Chief Financial Officer Britt Tabor recapped the hospital’s performance in April. Admissions for the month were on par with this time last year, but still came in under budget. The hospital had a loss of $1.2 million for the month, compared to a budgeted gain of $2.0 million. Uncompensated care — including losses from TennCare and charity care, as well as bad debt — totaled $4.8 million for the month, putting the hospital on track to reach more than $81 million in uncompensated care by the end of the fiscal year, Mr. Tabor said.

Committee members had objected that they did not have adequate time to discuss and question the contract, and that details such as salaries and benefits for Erlanger IT employees to be taken on by PHNS were not specified in the contract.

Erlanger CEO Jim Brexler pointed out that hospital employees worked for a year and a half to choose a vendor to provide the hospital’s IT services and to finalize the contract language.

“This organization has been on a year and a half of due diligence to get to this point tonight,” he said. “This has been a very thoughtful exercise, we want to be able to share all that with you. ... We feel good about it and we want you to feel good about it before you take an action.”

After an assessment of the hospital’s IT capability found gaps in services, two selection committees worked for a year and a half to narrow the candidate down to one, eight initial vendors, hospital officials said.

The resolution would upgrade the hospital’s technology management division, including its data center and telephone services, as well as add complete disaster recover services, said Britt Tabor, chief financial officer at Erlanger.

Sixty Erlanger IT employees would become employees of Dallas, Texas-based PHNS at “comparable pay and benefits,” the resolution said.

PHNS, which focuses on health care IT and has four hospital representatives on its 12-person board of directors, would put up $1.97 million to purchase equipment to replace Erlanger’s phone system, which will remain the hospital’s even after the contract with PHNS has expired, said Britt Tabor, Erlanger chief financial officer.

An Erlanger representative would have a seat on the company’s board as well, when one of the other hospitals’ term expires, said Chick Young, CEO and chairman of PHNS, at the meeting.

Budget and finance committee member Dr. Woody Kennedy said during discussions, “I hate to see this being held up at this point.”

The contract “has been looked at by a lot of people, and I understand the concerns that you have with further information, but I think you will be more than satisfied with the explanations that you get,” Dr. Kennedy said.

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