Erlanger hospital’s board of trustees may be having trouble deciding what kind of severance package, if any, to give to outgoing CEO Jim Brexler, but their decision to find a new leader was necessary. All of the challenges confronting Erlanger may not be Brexler’s fault, but it is clear that the hospital needs stronger, more effective leadership.
Several major issues that are seriously undermining the hospital stand out. One is the exodus from Erlanger of many of its leading physicians’ groups over the past several years. A second is the gradual deterioration of the hospital’s retained earnings, a core measure of financial health. Another is the way Brexler has ballooned the executive staff and handled business operations.
The problem of the exodus of doctors’ groups that practice chiefly at Erlanger is best reflected in the adage that hospitals don’t have patients; doctors do. When doctors shift their practice to competitor hospitals, hospitals lose patients, and money.
Erlanger, of course, has plenty of walk-in patients, but a large percentage of them come through the emergency room because they are indigent, and Erlanger, as the region’s mainstay public hospital, is where they seek care. What Erlanger needs to help balance the cost of its indigent care load is more patients who have health care insurance.
Indigent patients deserve excellent care; that’s not disputed. But under this nation’s fractured and unbalanced health care system, and the ever-rising number of uninsured and under-insured citizens, public hospitals are struggling to keep a sufficient ratio of patients with private insurance, either their own individual plan or their employers’ health insurance plans. Without an adequate share of the latter to offset the more meager reimbursements provided by Medicaid or written off as a public service for indigent care, public hospitals do well to survive, much less thrive.
In Chattanooga, that issue is especially critical. Memorial Hospital, though a non-profit Catholic facility, has never carried a fair share of the community’s indigent-care burden relative to its size, capacity and financial means. For-profit hospitals here, moreover, are not large enough to make much of dent in the indigent-care situation, nor do they attempt to provide level-one trauma care like Erlanger. And though Erlanger receives extra state and federal aid as the region’s largest level-one trauma center, that aid has never been enough to adequately address the financial burden of indigent care — some $80 million a year — that Erlanger carries.
Erlanger’s strength traditionally has been its adequate mix of insured patients, technology edge and leading physician groups that have based their practice largely at Erlanger. Under Brexler, there has been a steady decline in these indices. His weakness in building or maintaining relationships with physicians is one of the reasons cited by board members for terminating Brexler’s tenure.
The hospital’s underlying financial condition is troubling, as well. Its uneven year-to-year financial performance and its capacity for needed capital investments, or “funded appreciation,” has declined under Brexler, hospital observers say, forcing the hospital to skimp on needed investments, sell assets and operate facilities that are owned by developers, which reduces the hospital’s margin.
Brexler has also ruffled board members by using contractors to provide operational services at costs that previously required broad approval, and by making key personnel and policy shifts outside the board’s purview. He has failed, moreover, to build significantly on Erlanger’s critical role as a teaching facility under the University of Tennessee School of Medicine.
That affiliation provides Erlanger with medical resident physicians in many fields, strengthening its exceptional 24/7 range of medical expertise and its opportunities to build a formidable, leading-edge hospital.
A stronger, more assertive board would have acted sooner to correct some of these deficiencies. That it also has failed to do so shifts some of the burden for Brexler’s administrative shortcomings to the board itself. That’s no excuse to give Brexler a lavish, unearned severance package, but it should prompt broad members to move decisively toward vigorous leadership and improved performance at Erlanger.