published Tuesday, April 24th, 2012

Erlanger loses $4 million in March

 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.
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ERLANGER RED INK

July $1.3 million loss

August $1.5 million profit

September $1.3 million loss

October $2.1 million loss

November $3.2 million loss

December $3.9 million loss

January $2.1 million loss

February $0.6 million loss

March $4.1 million loss

Source: Erlanger Health System financial reports

Erlanger Health System executives want to bring in consultants to help them stem mounting losses at the county's public hospital.

The hospital lost $4.1 million in March, bringing its yearly loss to more than $17 million for the first nine months of the fiscal year.

The hospital is on track to lose several million more in April, if current trends continue. Meeting bond covenant requirements by the end of the year would be increasingly difficult, trustees learned Monday night at a Budget and Finance Committee meeting.

Interim CEO Charlesetta Woodard-Thompson asked committee members if they would consider a proposal to hire a consulting firm, a proposal she plans to present at Thursday's full board meeting.

"Unusual circumstances call for unusual measures," Woodard-Thompson told trustees. "Time is of the essence. We have to be successful, and we don't have a long time to get there."

Finance committee members acknowledged the grim numbers and peppered hospital executives with questions in one of the most lengthy finance meetings this year.

Erlanger began losing money last fall, as doctors moved lucrative surgeries to other hospitals. Under pressure from the board, former CEO Jim Brexler resigned in December.

The hospital has implemented three rounds of staff cuts since the first of the year, which will save the hospital about $10.5 million annually.

Woodard-Thompson said they have taken measures to bring doctors back to the hospital and hoped to be in the black by April. But Monday she said doctors had not yet come back.

"The feelings are a lot deeper than we had anticipated," she said. "We are going to have to do more to get them to come back."

Doctors' unhappiness with conditions at the hospital was apparent Monday night when several board members questioned the wisdom of a $500,000 expenditure to buy a urology table during tight financial times.

Dr. Argil Wheelock and Dr. Amar Singh told trustees they could not continue to do their work if they do not have the new equipment.

The table now in use has shut down in the middle of a procedure at least five times in recent months, causing stress to patients who had to be moved to another room. It is so old, there is a danger of radiation leakage, the doctors said.

"We are treating the most complicated patients on the worst machine in a 100-mile radius," Singh said. "I refuse to do it."

Chief Financial Officer Britt Tabor said the hospital had cut back significantly on capital purchases, but was buying the most-needed equipment.

March losses were partially because of staff layoffs, which cost the hospital about $900,000 in one-time severance pay, Tabor said.

But admissions, inpatient surgeries and overall revenues were all down.

The hospital also has seen an increase in uncompensated care -- about $83 million last fiscal year, but expected to top $91 million this year.

While Tabor said there is a danger of the hospital violating its bond covenant, especially its debt to cash-on-hand ration, he noted it is only a technical violation. The hospital has significant reserves it has not touched and is still able to pay its debts, he said.

Woodard-Thompson and Tabor said the hospital would be required to hire a consultant firm if they violate bond covenants in June, and hiring one now would be considered proactive and would address problems more quickly.

The team would look to see how the hospital could cut costs, but also implement better practices, Woodard-Thompson said.

Finance Committee Chairman Donnie Hutcherson said he would like to have the team report to both hospital leaders and the board.

Trustee Richard Casavant noted he dislikes outside consultants but would consider the option.

"We have a severe revenue problem. It did not occur overnight and won't be cured overnight," he said.

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about Mariann Martin...

Mariann Martin covers healthcare in Chattanooga and the surrounding region. She joined the Times Free Press in February 2011, after covering crime and courts for the Jackson (Tenn.) Sun for two years. Mariann was born in Indiana, but grew up in Pennsylvania, Tennessee and Belize. She graduated from Union University in 2005 with degrees in English and history and has master’s degrees in international relations and history from the University of Toronto. While attending Union, ...

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