The Erlanger Baroness campus.

JoAnne Favors

NASHVILLE - Concerned over Erlanger Health System's most recent cost-cutting move, Rep. JoAnne Favors, D-Chattanooga, said Wednesday she's dropping her co-sponsorship of a bill overhauling the ailing public hospital.

"Because of events that have occurred in recent days at Erlanger in Chattanooga, I feel that this bill would not safeguard employees," said Favors, a House Health Committee member, as the bill was presented Wednesday before the panel.

Hospital officials announced this week a temporary freeze on 4,000 employees' paid time off until July 1 in an effort to stem financial losses at Erlanger.

Favors, a retired health care administrator and nurse who once worked for Erlanger, said she doesn't feel able to support the bill "until some amendments are made that would protect employees of the hospitals."

The bill's sponsor, Rep. Mike Carter, R-Ooltewah, wound up delaying consideration of the measure. Carter said immediately after the hearing that he wasn't entirely clear about Favors' concerns but intends to meet with her.

"I think when they understand the bill, everybody will be for it," Carter said. "Health care now is a hunt for dollars and the [federal] Centers for Medicare and Medicaid Services has the money. They tell you where it's at. We've got to the point where we have to design systems to get the money."

Erlanger is supporting the bill which grants the Hamilton County Hospital Authority's politically appointed board the ability to form a non-profit public benefit corporation to run the hospital with the board's continued oversight.

Hospital CEO Kevin Spiegel hopes to use IRS 501(c)(3) status to encourage more philanthropic support of the hospital. The bill, lawmakers have said, is also intended provide more insulation to management from political interference and past attempts by trustees to micromanage affairs.

Other recent management steps included changes to employee benefits and costs of insurance for retirees, Favors said. Then came the freeze on taking paid time off.

"I don't feel this is a fair decision to freeze employees' time off even though I was told that if funding was forthcoming they would reverse that," Favors said following the committee meeting.

She said the hospital should consider other actions like a hiring freeze. That "would make employees feel a lot better," she said

In fact, Favors added, management would do well to solicit advice from employees on money-saving measures.

Steve Johnson, Erlanger's vice president of government relations, said departments already have to establish that pending vacancies involve "essential" positions and get approval from higher ups to fill them.

Hospital management, he said, sees the benefits freeze as a less painful and temporary money-saving move compared to laying off employees. That's a step some hospitals, such as Vanderbilt Medical Center in Nashville, have made.

"It was a painful decision," Johnson said of the freeze. "We all recognize there's a human impact in this."

The move is expected to save Erlanger about $600,000 per two-week pay period. Johnson said the savings are necessary to help avoid breaching Erlanger's bond covenants.

Beaching the covenants could result in bond insurers hiring consultants to dictate operations, Johnson said. And that would likely result in a "slash and burn" approach on cost-cutting that could result in worse actions affecting areas including Erlanger's mission of serving the poor, he said.

Many Tennessee hospitals are scrambling to deal with a changing health care landscape and, Democratic critics like Favors say, Republican Gov. Bill Haslam's and GOP lawmakers' refusal to expand Medicaid under the federal health care law. Certain types of federal funding is being cut because the law anticipated states would expand Medicaid programs like the state's TennCare program for the poor.

Favors said, she hopes her Republican colleagues who dominate the General Assembly "will understand" how their objections to expanding Medicaid to an estimated 180,000 people is hurting hospitals like Erlanger.

"Perhaps the Erlanger employees can contact them and suggest they do that," Favors said.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.