Erlanger hospital's management plan outlines furloughs, buyouts and also possible layoffs

Erlanger hospital's management plan outlines furloughs, buyouts and also possible layoffs

December 22nd, 2011 by Mariann Martin in News

This is a part of the Erlanger campus as shown near downtown Chattanooga on Wednesday.

Photo by Tracey Trumbull/Times Free Press.

Erlanger hospital employees have been asked to take 12 days off in the next two months, consider voluntary buyouts and face possible layoffs as Chattanooga's only public hospital bleeds money.

The hospital has lost more $6 million in the last five months, half of that in November.

The hospital outlined their labor management plan for 2011-12 in an email sent to managers on Monday. The Times Free Press obtained a copy of the plan.

"We understand that this is a difficult message to hear, however it is vital that we take swift action to overcome our financial challenges," the plan states. "If we don't take immediate steps, we have the potential to affect our strong bond rating, leading to disastrous results for Erlanger and (the) community we serve."

Erlanger officials did not respond to repeated emails and phone messages requesting more information throughout the day on Wednesday.

While patient admissions at the hospital have increased this year, monthly fiscal reports show surgical outpatients and outpatient revenue has fallen.

The cost-cutting measures come during a time of turmoil for the hospital, with the departure of a seven-year CEO and questions over board appointments.

In October, the hospital announced CEO Jim Brexler would retire at the end of the year. Chief operating officer Charlesetta Woodard-Thompson has been named interim CEO.

The board voted earlier this month not to give Brexler a more than $700,000 severance package, but the issue may be brought back up, board members have said.

County officials recently appointed a new board member after some members of the board asked them to wait on the appointment, while city officials said this week they would wait to approve a new appointment until the turmoil over Brexler's resignation died down.

LABOR MANAGEMENT PLAN

The two-page plan outlines several ways the hospital will cut costs over the next three months, noting labor represents 50 percent of costs at the hospital. The plan asked managers to meet with employees to discuss the measures before noon on Wednesday when the information was posted on Erlanger's intranet site.

The hospital has about 4,700 employees.

Some departments will require that all full-time employees take 12 days off before March 1, using their paid annual leave.

Salaried employees should work if they do not have enough paid annual leave to cover their time off, the plan says.

The measure will save $1.4 million by the end of June, the plan says.

It was not clear if the policy applied only to Erlanger hospital employees or the Erlanger Health System. Erlanger has five Tennessee-based medical campuses and took over management of Hutcheson Medical Center in Georgia earlier this year.

According to newspaper archives, most Erlanger employees accrue about one vacation day per pay period. At the time the employee earns that vacation day, Erlanger records the expense.

As employees take days off, the hospital draws from the bank of accumulated "paid" days, which means it doesn't have to pay again for days that were already recorded as expenses. The result is reduced labor expenses in the pay period in which paid time off is used up, archives noted.

Erlanger spokeswoman Pat Charles did not respond to questions about how many employees will be affected by the policy or how the hospital would ensure proper patient care with employees taking off 12 days in two months.

The plan also says some departments cannot work premium overtime hours and other departments cannot exceed budgeted overtime hours, beginning Jan. 1.

The $5 premium for working extra shifts will be eliminated on Feb. 1, the plan says.

A voluntary buyout program will be implemented in select departments in beginning in January.

The hospital is not implementing a job-hiring freeze but will review all current and future open positions to evaluate which positions are not needed, the plan says.

The plan also notes there may be layoffs.

"We also anticipate that positions will be eliminated in selected departments, starting with the executive level," the plan says.

OTHER HOSPITALS

In response to questions about the labor plan, Charles sent an email noting that Memorial Health Care System was also implementing reductions in staff time.

"Assume you are calling others to see if they have implemented similar labor management plans," Charles wrote in the email to the Times Free Press.

Memorial spokesman Brian Lazenby said Memorial asked nonclinical and office staff to take off four days between Christmas and New Year. All other staff would work a regular schedule during the holidays, he said.

Lazenby said he did not know how many of the hospital's 4,300 employees were affected. He said the hospital was not implementing any additional furloughs.

"The economic recession of the past four years has been difficult for all industries," Lazenby said in an emailed statement. "Memorial has identified a host of projects to ensure strong performance for the remainder of our fiscal year, and one of those is related to the flow of work in areas that are not directly related to patient care."

Alison Counts, spokeswoman for Parkridge Health System, said the hospital did not anticipate any layoffs, furloughs or other cost-cutting measures at this time.

NEXT STEPS

Erlanger's board will meet in a special called meeting sometime next week, according to board trustee James Worthington.

Worthington said Wednesday he did not have much information about the labor plan, but said it was important that the hospital return to firmer economic footing.

"Someone has gotten us in a terrible situation at Erlanger. We must find some way to get ourselves in a better economic situation," he said.

Follow the latest Chattanooga news on Facebook