Future Erlanger board trustees also will have to adopt clear policies reining in their potential conflicts of interest along with provisions punishing members who violate them, according to the legislation.
Local lawmakers intend the legislation as medicine for financial and other ills plaguing the public hospital as well as their concerns that the University of Tennessee's College of Medicine may be engaged in a power play to control the public hospital.
"I don't believe there was a lot of conflict of interest language in the original  act," McCormick, the bill's sponsor, said after the measure cleared the first of several legislative hurdles.
McCormick said the new provisions were included "on purpose. We want to have a board that is there not for certain constituencies out in the community, but one that is just there for Erlanger hospital."
Erlanger board Chairman Ron Loving later said the hospital already has a strong compliance program.
"Whether there's too much or too little regarding conflict of interest in the legislation, I cannot say at this point," he said. "I will say that it is very important to look at and to manage potential conflicts of interest at Erlanger."
A group of Erlanger staff members is reviewing the legislation, he said.
Erlanger's board of trustees, who will meet Monday, is expected to vote on a new CEO. The finalists are Memphis-based Methodist University Hospital CEO Kevin M. Spiegel; Rear Adm. Donald R. Gintzig, senior health care executive with the U.S. Navy;and Ken D. Haynes, who oversaw St. Joseph Hospital, St. Joseph East Hospital and St. Joseph Jessamine, based in Lexington, Ky.
A Hamilton County commissioner wants to see a "short list" of potential new Erlanger trustees before approving legislation reforming the hospital's governing board.
"My problem is that the County Commission has final approval, but we don't have any knowledge of who the prospective initial board members are before we approve this legislation," Commissioner Tim Boyd said Tuesday. "Before we vote on the legislation, I want to see the short list of community members for the board."
Boyd's comments came just hours after legislation to remake Erlanger's board members cleared its first legislative hurdle Tuesday.
County Mayor Jim Coppinger said there is no "list."
"It's really premature to talk about the selection process when the bill hasn't even made it through the legislature yet," the mayor said.
The bill, which still has several House committees to go through as well as the Senate, also must be approved by the County Commission.
Then, to get the new board in place, local legislators, "after consultation" with the county mayor, will recommend initial appointees to the full General Assembly for its approval, the bill states.
Erlanger's new board ultimately will be self-perpetuating, according to the legislation, but state lawmakers and county commissioners will have veto power over any trustee's appointment if they are willing to tell the public why a veto is necessary.
"In the very unlikely event that the board appoints an individual who would clearly threaten the integrity of the institution, a mechanism exists for the County Commission and Legislative Delegation to disqualify that member from serving," an executive summary of the legislation states.
The bill's sponsor, House Majority Leader Gerald McCormick, R-Chattanooga, said that although the intent of the board overhaul is to have trustees who are not "appointed by politicians," having a public check on the oversight of a $500 million health provider is important.
The bill whittles the existing 12-member board to nine trustees. Currently, trustees are named by the legislative delegation, the County Commission, Chattanooga City Council, the county's Chancery Court judges and the Chattanooga & Hamilton County Medical Society.
Other stipulations include:
• At least one board member must be experienced in corporate compliance; one must be a representative of academia; one must be Erlanger's chief of staff (one-year term).
• Board terms will be three years; no member may serve more than three terms.
• Initial trustees will have staggered terms.
• Legislative delegation will name the initial board chairman.
• All board members must live in Hamilton or contiguous counties.
• At least seven members must be full-time Hamilton County residents.