You would think Erlanger would have learned some lessons by now about management bonuses and the timing of them.
But apparently not.
Once again, dozens of Erlanger Health System's managers will divide about $3.1 million in "incentive pay," according to hospital executives. Word of the bonuses came one week after Chattanooga Mayor Andy Berke pledged $1 million in city taxpayer money for a new children's hospital - a decision he reached after watching Erlanger's response to the Nov. 21 Woodmore bus crash, when nearly three dozen schoolchildren were rushed to the Children's Hospital emergency room. Six children were killed in the accident.
"We had first responders, doctors, nurses, and administrators who poured their hearts and souls into caring for these children and their families," Berke said. But the hospital ER's crowded conditions meant critically injured patients and their families were forced to share a large common space "only separated by a curtain, where families could hear what others are saying, what's going on with a child."
No one doubts the need for improved facilities at the East Third Street hospital, and in fact Erlanger is already in the middle of a campaign to raise $40 million for just the initial phase of the new hospital - an outpatient facility, not a new Children's ER. (The stated thinking is that outpatient offices drive revenue to help fund a new ER.)
But doesn't anyone question what $3.1 million in top manager bonuses says to City Council members who still have to approve Berke's pledge? Does anyone question what $3.1 million in top manager bonuses says to Joe and Jane Public who are now being actively solicited for donations to this clear need? What does it say to Walmart stores that raised $195,586 for Children's Hospital just this month - the same month that Erlanger CEO Kevin Spiegel, for example, will receive about a 34 percent bonus on his salary of $800,386, or about $272,130 extra dollars?
To be sure, Spiegel and his managers deserve kudos. After all, Erlanger was in dire financial straits when Spiegel arrived nearly four years ago. The hospital lost $36 million between 2008 and 2013, then earned $11.3 million in 2014 and $37.3 million in 2015.
But it's worth adding here, too, that no small portion of the increased revenue Erlanger earned came from the fact that more people now have access to health care insurance, thanks to the Affordable Care Act. In the fiscal year that ended June 30, 2015, Erlanger officials said the hospital boosted patient admissions by 9.4 percent and reported an increase in the number of surgeries by more than 7 percent. Where do we think that came from? It came from the jump in Tennessee residents who gained insurance. Erlanger did well. And so did the ACA - better known as Obamacare. The uninsured rate in Tennessee has fallen by 28 percent since the ACA was enacted in 2010, according to state and federal reports.
We mentioned lessons Erlanger might have learned by now. Take for instance the one trustees should have learned in 2014 when they voted to pay out $1.7 million to 99 top managers. That vote came as an unsettling surprise to our local legislative delegation that had gone to the mat in Nashville and Washington for Erlanger to get $19 million in federal funding to save the hospital system from disaster.
Local lawmakers went into hyperventilation mode and forced trustees to vote on the bonuses again in May. Ultimately nothing changed, of course, except that the hospital lost out on some other legislation they'd hoped lawmakers would pass for them. Just a few months later, Erlanger board members voted to pay out another $2.1 million in incentive pay to its then-top 124 executives for 2015.
If you're keeping count, that's an average top manager bonus of about $16,900 in 2014, $17,200 in 2015, and $19,200 in 2016.
But, hey, a couple of million here, another couple there and $3 million in a third year - that's chump change. Chump change for what could have been $7 million toward that new Children's Hospital instead became bonuses - a business expense defended with talk about fending off talent "competition."
In the corporate world's top management levels, that may hold water. But most people work for salaries, not five-figure yearly bonuses. And frankly far too many Hamilton County residents don't even make in a year what those bonuses average.
We truly hope Erlanger does well with its fundraising effort to build a new Children's Hospital, and we share the concern that the Children's ER facility needs vast improvement.
But perhaps next year, the reward for those truly dedicated and truly already high-paid managers might be a multimillion-dollar boost to that cause itself - not to them.