Erlanger consulting contract revealed

Erlanger consulting contract revealed

July 7th, 2011 by Chris Carroll in News

Erlanger Hospital

Erlanger Health System never publicly disclosed that it signed a $480,000 contract with a consulting firm in April to draft a personnel "action plan" for Hutcheson Medical Center, records show.

The resolution the Erlanger board of trustees passed approves the contract with Community Health Corp. but does not mention that the firm would receive $40,000 a month for up to a year. The management agreement finalized in April between the hospitals doesn't mention the payment to the former Hutcheson consultant either.

But that information can be found within the 30-page contract between Erlanger and Plano, Texas-based Community Hospital Corp.

The Chattanooga Times Free Press obtained a copy of the contract on Wednesday.

Erlanger officials who did not want to be named said hospital executives briefed trustees on all costs related to the management agreement, including the money for the consulting firm.

Repeated attempts to reach Erlanger Board Chairman Dan Quarles and several other trustees were unsuccessful Wednesday.

Hutcheson entered a management agreement with Erlanger after several consecutive seven-figure monthly operating losses. Erlanger is expected to gradually funnel up to $20 million in credit into the Fort Oglethorpe hospital.

The contract, which took effect June 10, includes a clause to allow either Erlanger or Community Hospital Corp. to terminate the agreement after three months with 45 days' notice.

Gregg Gentry, Erlanger's vice president for human resources, said Wednesday it's "likely" the hospital will opt out before the bill reaches $480,000.

Appointed by elected leaders from Hamilton County and Chattanooga, Erlanger trustees routinely review and vote on resolutions with a dollar amount for whatever is being bought.

Trustees must approve hospital equipment purchases, doctor hires and other contracts. At the time of the vote on the Community Hospital contract, Erlanger policy required board approval of any contract or transaction amounting to more than $100,000. That amount recently was raised to more than $250,000.

The Community Hospital resolution did not include a dollar amount.

Hutcheson hired Community Hospital last year, before it signed the management contract with Erlanger, to come up with a plan to save the struggling community hospital. In April, Hutcheson laid off 75 workers.

The contract calls for Community Hospital to provide "operational assessments" and "human resources and development" for Hutcheson, along with other assistance to be determined by top Erlanger executives.

The management agreement between Erlanger and Hutcheson asks Community Hospital to help both hospitals "identify and transition those employees for which there is no foreseeable need" at Hutcheson.

Executives from both hospitals have said they don't expect a "major layoff" for the 120-day transition period after both hospitals signed the management agreement on May 25.

Erlanger employs vice presidents to handle strategic planning and human resources - salary records show Joseph Winick and Gentry are paid about $400,000 a year, collectively - but one of them insisted Community Hospital's help is invaluable.

"They do this for a living on a day-to-day basis," said Gentry, who is also Erlanger's administrative liaison to Hutcheson. "We're getting the best of both worlds."

Gentry added that Erlanger has rehired between five and 10 laid-off Hutcheson workers.