Despite a consultant's recommendation, Erlanger Health System outsourced police jobs to a private company at nearly twice the cost and disregarded a pledge that former security officers would get first consideration if their department was restructured.
"We wouldn't leave you hanging out there and say, 'well, you're on your own,'" Chief Operating Officer Charlesetta Woodard-Thompson told a gathering of officers, according to a videotape obtained by the Chattanooga Times Free Press. "That's not right. We're not going to do that."
Added Vice President of Government and Corporate Affairs Doug Fisher at the same meeting, whose date could not be verified: "This is an administration telling employees, 'We've got your back; we've got you covered.'"
Erlanger dissolved the entire department in March, the same month it concluded a search for private security companies to replace the officers. In its request for proposals, Erlanger promised to award a five-year security contract "to the Proposer who submits the lowest and best proposal," records show.
On March 24, hospital trustees unanimously went along with a management-backed proposal to outsource to Walden Security, a Chattanooga-based company that offered its services at an annual rate of $2.3 million -- more expensive than all but one bid. SEI Inc. submitted the lowest bid at $1.5 million a year.
Bid coordinators at SEI Inc. last week declined to discuss the matter with the Times Free Press.
Three other security companies -- two of which, like Walden, are certified by the International Organization for Standardization -- submitted bids below $2 million, Erlanger records show. The hospital sent letters to the losing bidders stating that Walden Security offered "the lowest & best bid" at $2.3 million.
Total expenses for the Erlanger Police Department's 2008-09 operating budget were $928,579, records show. The hospital spent $1.4 million on security in 2009-10.
Erlanger has reported several monthly losses recently and historically has requested and received annual seven-figure infusions from Hamilton County. This year, the hospital got $1.5 million in tax money.
"Walden Security was the lowest priced agency that met all the selection process qualifications and could most effectively meet the security needs of our campuses," hospital spokeswoman Pat Charles said in an email to the newspaper.
Hospital executives have at least two stories justifying the change. During the March 24 meeting announcing the Walden bid award, Woodard-Thompson said Erlanger had "difficulty in recruiting and retaining a qualified police force."
But in an interview last week, Fisher said Erlanger abolished its police department because "the city would no longer commission our officers."
On Oct. 6, 2009, the Chattanooga City Council adopted a resolution that gave 25 Erlanger officers commissions that didn't expire until 2050, meeting minutes and police identification cards show.
Interviewed Friday, Chattanooga City Attorney Mike McMahan said a few of the Erlanger officers once left the Chattanooga Police Department "under less than favorable circumstances," but that otherwise, council members approved the commissions without hesitation.
The City Council did have the power to revoke Erlanger's police commissions, records show.
"That's not what happened in this case," McMahan said, adding that establishing future Erlanger police commissions was "never a problem" for the city.
Dan Johnson, chief of staff for Chattanooga Mayor Ron Littlefield, said the city commissioned Erlanger's officers until 2050 "as a temporary means for them to have security until they were able to hire their private security force that is now in place."
Erlanger initially awarded Walden Security a temporary contract to work alongside the hospital's longtime police force last year.
But the table appeared set for permanence. On April 12, 2010, executives drafted a memo titled "You Should Know: Erlanger Signs Temporary Contract with Walden Security" and named Ben Allen, a Walden employee, Erlanger's director of security.
Two days later, Allen received a master key for the hospital, a privilege afforded only to top security officials.
On Sept. 2, 2010, employee relations worker Jan Gentry emailed an Erlanger police officer to say Walden employees -- presumably Allen -- had "the right to write, change and enforce policy in the security department."
Three weeks later, Erlanger's bid proposal for security services went out. It was five months after executives drafted the memo about Allen's directorship. Six companies responded to the request.
On March 24 of this year, Erlanger's board of trustees unanimously awarded Walden Security the five-year contract at $2.3 million a year. That evening, hospital officials said the transfer wasn't a cost-saving measure, a position they stand by today.
"The intent [and we were very public about this] was always to provide a safer environment for our patients, visitors and staff," spokeswoman Charles said in an email.
Unlike former Erlanger police officers who had standard law-enforcement arresting authority, Walden Security employees have no more arrest privileges than private citizens, Charles said in an interview.
In an interview, Fisher said the hospital looked for a security firm "that had the ability to provide commissioned police officers," an extra that never was mentioned in Erlanger's request for proposals.
Walden now uses Erlanger money to pay commissioned, off-duty Hamilton County Sheriff's Office deputies to supplement observe-and-report Walden guards so that there is some kind of arresting authority on scene, Charles said.
Amy Walden and Mike Walden, the Lookout Mountain-based couple who run Walden Security, donated $1,000 each to election campaigns for Hamilton County Sheriff Jim Hammond, financial disclosures show.
With the stated goal of beefing up its police force, Erlanger paid $6,000 to Durham, N.C.-based Security Assessments International Inc. to conduct a study, now considered confidential. The Times Free Press obtained a copy.
The Feb. 5, 2010, study lauded the Erlanger Police Department's officers, calling them "knowledgeable, experienced and dedicated police and security personnel."
It noted a tight annual security ledger and a small staff, praising the officers for maintaining order "despite these budgetary and manpower constraints." The study recommended expanding the existing force and advised against using contract security personnel for several reasons, including a high turnover rate and inexperience.
"The quality of the replacement officers may not be up to the hospital's standards," the report states. "[Private security officers] are often drawn from available personnel who do not have experience in the health care setting."
In its request for proposals, the hospital said former Erlanger Police Department officers would get "first priority" to retain their positions with the winning security bidder.
But after the contract was awarded, Charles said those officers would "have an opportunity" to apply for a job with Walden -- no guarantees.
Many former Erlanger officers logged more than 20 years at the hospital. They handled 50 assaults, 79 building emergencies and 259 suspicious activity incidents in fiscal year 2008-09, Erlanger records show.
Andrew Stinnett, a Chattanooga attorney who represents seven former Erlanger police officers, hand-delivered a letter asking each board trustee to review the consultant's study before voting on the Walden contract.
He said none of the trustees responded.
James Worthington, one of the trustees, said he "thoroughly examined the contents" of the study but voted for Walden because hospital executives recommended it and told him the city wouldn't commission additional Erlanger officers.
"The truth should always come to the surface," Worthington said Friday. "If I had been told that the city or county would have commissioned other officers so that we had a sufficient amount, I would have voted against Walden. ... I'll stand on the fact that I was not told that."