Aerial view of Erlanger hospital in Chattanooga, which could get a new nonprofit board in a bill working its way through the Tennessee General Assembly.What the bill does:According to an Erlanger news release:• The Hospital Authority is permitted to create a Tennessee Nonprofit Corporation (Operating Board). It would be a 501 (c)(3) federally tax-exempt organization.• The Authority, if it chooses, can lease the facilities and operations of Erlanger Health Systems to the Operating Board for adequate consideration, sufficient to cover the Authority’s current and future debt service. The Authority remains intact to oversee the lease. The lease will not increase the bonded indebtedness of the Authority.• The Operating Board assumes all debt and obligations which are payable out of the assets of the Operating Board with no liability to state or local governments.• The Operating Board shall have all the rights and powers under the Tennessee Nonprofit Corporation Act and shall serve a governmental, public purpose. for purposes of leasing and operating the hospitals• Nothing in the act will add or reduce existing financial obligations of the county to Erlanger.• The Operating Board is directed to adopt competitive bidding procurement rules and regulations based on best corporate business practices. It also encourages opportunities for Disadvantaged Business Enterprises as already defined by state procurement law.• The Operating Board is subject to and covered by Tennessee’s Government Tort Liability Act as well as the state’s Open Records Act and Open Meetings Act. The Hospital Authority remains under these laws as well.• Employees and contractors “leased” to the hospital by the Authority remain eligible for all benefits, retain their workers compensation status and are subject to personnel policies and procedures.• The Operating Board will file annual financial reports to the Authority. They will include data on the provision of charity care, indigent care and other community benefits benefits the hospital provides.• The Operation Board shall maintain Erlanger’s public mission providing trauma care and serving indigent, low-income and needy within the service area.• The Operating Board is direct to adopt conflict-of-interest rules and policies for directors, officers and medical staff as it relates to hospital operations. Both state and Internal Revenue Service regulations governing nonprofit boards include conflict of interest provisions as well.
Local state senators and representatives have gone back to the drawing board on legislation they say is crucial for the survival of Erlanger Health Services.
Unlike last year’s bill, which was spurned by Hamilton County commissioners, the new bill isn’t a private act and therefore doesn’t require commissioners’ approval.
The legislation instead changes a general state law. It would pave the way for the public Chattanooga-Hamilton County Hospital Authority to, if it chooses, create a new operating board that would assume management of the hospital.
Last year’s version amended the Legislature’s 1976 private act creating the hospital authority and how its 12 trustees are appointed. They currently are appointed by the city, the county, local lawmakers, the two chancellors and the Chattanooga-Hamilton County Medical Society.