Letter warns Erlanger to slow CEO search

Letter warns Erlanger to slow CEO search

January 18th, 2013 by Judy Walton in Local Regional News

Chattanooga's Erlanger Hospital is seen in this aerial file photo.

Photo by Doug Strickland/Times Free Press.

PAID TO GO AWAY

Erlanger trustees have forced out each of the past three chief executive officers and paid them all severance.

* Jim Brexler

CEO December 2003-December 2011

Severance: $728,000 over 15 months

* Dennis Pettigrew

Erlanger CFO September 1997-March 1998; COO March 1998-October 1998; CEO October 1998-February 2003

Severance: $131,000 (awarded in settlement of lawsuit seeking $380,000)

* Sylvester "Skip" Reeder

CEO November 1994-March 1998

Severance: $516,000 over two years

Document: Tennessee lawmakers' letter to Erlanger

Letter from Tennessee lawmakers to Erlanger on CEO search

A strongly worded letter from Hamilton County lawmakers warns Erlanger Health System trustees for the second time in weeks to slow down their CEO search.

All seven members of the local delegation signed the letter warning that rushing the hire "would be premature" and could lead to "a [CEO] contract that would be expensive and disruptive to terminate," according to the letter dated Tuesday.

State Rep. Gerald McCormick, House majority leader and head of the delegation, said Thursday the lawmakers acted after hearing from Erlanger trustees that the CEO vote might be moved up from late March to as soon as next week.

"The delegation felt we needed to make it clear for them what atmosphere they would be operating in," McCormick said.

"I understand we don't have the legal authority to tell the board what to do at Erlanger -- we don't run Erlanger. That letter is more a piece of advice than a directive.

"Whoever they planned on picking might be a great hire," he added. "We just think it's better for them to wait."

Board of Trustees Chairman Ronald Loving said Thursday there has been "no deliberate attempt to speed up or slow down the process," but the board expects to be ready for a vote earlier than originally estimated.

"It does look like we'll be on course to make a decision earlier than the end of March, but I don't know exactly when," he said.

Dr. Phyllis Miller, an Erlanger trustee and chairwoman of the CEO search committee, said she had told McCormick earlier this week the vote could come earlier. She said he told her "it would be best if we waited until the first week of February."

Trustees have been seeking a replacement for Jim Brexler, who was forced out in December 2011 after the hospital drove away doctors and lost more than $6 million in five months.

The three finalists are retired Rear Adm. Donald R. Gintzig, with CEO experience in the Navy and private health care industry; Ken D. Haynes, former CEO of St. Joseph Health System in Kentucky; and Kevin M. Spiegel, CEO of Methodist University Hospital and assistant professor at the UT College of Medicine.

McCormick first wrote trustees Dec. 19 asking them to slow-walk the decision because the delegation is crafting legislation amending Erlanger Health System's governance.

On Dec. 27, hospital trustees held a secret meeting, which some later said was to discuss the response to McCormick's letter. But state Rep. Mike Carter, R-Ooltewah, said Thursday he wasn't aware of any response.

"Once having notified the board of our intention to [revamp its structure], I think we should have some communication with the board," Carter said. "I haven't heard a word from a soul."

Later, some trustees said they would stick with their initial March timetable.

On Thursday, McCormick said hiring a CEO before a new governance structure is in place could lead to a quick and costly buyout.

"If there was an expensive long-term contract we had to buy out, it's just better to let the dust settle before we make an expensive settlement," he said.

Brexler and both his immediate predecessors, Dennis Pettigrew and Sylvester "Skip" Reeder, were forced out before their contracts ended and walked away with pricey severance packages.

Most trustees contacted for comment did not return calls Thursday.

Trustee James D. "Donnie" Hutcherson had no comment, saying he wanted to talk to his board colleagues.

Trustee Russell King said he'd be fine with slowing the process.

"The delegation has been very good to Erlanger, very supportive of the mission of the hospital, so when they speak we need to listen. And we do," King said.

"There's a number of issues it would be helpful to clean up first," he added, mentioning affiliation and faculty practice agreements with the University of Tennessee, as well as an ongoing operations study.