Erlanger defends bid process after awarding Ritz-Carlton $288,000 contract

Erlanger defends bid process after awarding Ritz-Carlton $288,000 contract

August 30th, 2011 by Chris Carroll in News

Erlanger Hospital

WHERE'S THE MONEY GOING?

Erlanger says it will spend up to $500,000 on Ritz-Carlton for customer service training sessions. Here is the breakdown:

  • $35,000 -- Initial trip for Ritz-Carlton representative
  • $65,000 -- Other preliminary expenses
  • $288,000 -- Training sessions scheduled for October
  • $112,000 -- Allocated for optional future sessions

Source: Erlanger Health System

Erlanger Health System spent at least $35,000 on Ritz-Carlton before it awarded the hospitality chain a $288,000 contract to provide customer service instruction at the public hospital, officials said Monday.

The hospital initially branded all Ritz-Carlton expenses as a lump sum for training and implementation. Instead, a $35,000 contract paid a Ritz-Carlton corporate university representative for a 2 1/2 day preliminary trip to Erlanger.

The trip included a meeting with top Erlanger executives, four sessions with a 45-member hospital team and tours that illustrated daily operations at Erlanger -- all of which made Ritz-Carlton's program "distinctively Erlanger's," according to a hospital news release.

The hospital spent about $65,000 on other expenses as the hospital decided on Ritz-Carlton, Chief Nursing Officer Lynn Whisman said, but she didn't have exact details on how the money was spent.

Had Erlanger officials decided against Ritz-Carlton, "we'd have [lost] $100,000," she said.

Two other hospitality consulting companies vied for the Erlanger contract, but there was no bid process for customer-service sessions that could end up costing taxpayers $500,000 if Erlanger decides to bring Ritz-Carlton back for future educational sessions.

Erlanger officials defended the no-bid procedure Monday, saying the hospital was correct in bypassing a competitive bid process and awarding a "professional services" contract to Ritz-Carlton.

"Tennessee law says government entities do not have to bid professional services," hospital spokeswoman Susan Sawyer said.

Even early in the process, Whisman said, "it was so clearly the Ritz going forward."

Lynn Whisman of Erlanger

"There was a lot of board support, executive-level support and steering committee support," she said. "Ritz had it all."

Erlanger did not provide the other two companies' proposed prices. The Times Free Press submitted a public records request for copies of the Ritz-Carlton contracts and, by law, the hospital has about a week to respond.

In October, a Ritz-Carlton speaker is expected to lead several four-hour sessions, each of which will hold 400 employees, hospital officials said.

The bill for those sessions is $288,000. On Thursday, Sawyer said Ritz-Carlton prohibited the media from attending the sessions because of proprietary information the hotel chain prefers to keep secret.

Erlanger's publicly appointed board of trustees approved the Ritz-Carlton contracts this year, along with an optional $112,000 for future customer service sessions that would cater to doctors. Trustees lobbied hard for the sessions, citing a need for "service excellence."

Data appears to substantiate their concerns.

According to statistics compiled by the U.S. Department of Health and Human Services, Erlanger lags a few percentage points behind Tennessee's average patient satisfaction rates in nine out of 10 quality measures tracked by the government.

Among other categories, the measures explore whether nurses always communicated well with patients and whether rooms and bathrooms were always clean -- a category in which Erlanger fell 10 points behind the state average of 72 percent satisfaction.

By comparison, Memorial Health System and Parkridge Medical Center, Chattanooga's major private hospitals, finished tied with or ahead of state and national averages in all 10 quality measures.

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