Documents show Erlanger's physician contract flap breeding culture of distrust, threatening hospital's flagship stroke program

Erlanger Health System

Erlanger Health System administration's pattern of disrupting physician contracts is threatening the hospital's flagship stroke program and breeding a culture of distrust among the hospital's medical staff, according to documents obtained by the Times Free Press.

Letters sent to Erlanger's Board of Trustees reveal that Erlanger plans to terminate its exclusivity contract with Tennessee Interventional and Imaging Associates, or TIIA, if the group doesn't agree to a contract amendment that would give Erlanger additional control of the group and potentially open the door for a trustee on Erlanger's board - Dr. Blaise Baxter - to provide interventional radiology coverage at Erlanger East Hospital.

The group is the backbone of Erlanger's Southeast Regional Stroke Center, which serves patients in a 5,500-square-mile area and is one of the largest, most accomplished stroke centers in the nation, according to Erlanger's website.

Baxter resigned his top post with TIIA in January 2018, but since then Erlanger CEO Kevin Spiegel has been pressuring the group to rehire Baxter, according to multiple documents.

After negotiations to rehire Baxter failed, Erlanger issued on Jan. 7 a termination notice to TIIA, citing financial concerns. However, a letter from TIIA to Erlanger's board and hospital leadership says the company increased patient revenue by 23 percent from calendar year 2017 to 2018, and a recent third-party audit found "[no] material issues ... regarding TIIA's practices and procedures."

Tanner Goodrich, Erlanger's vice president of operations, confirmed the notice of termination but didn't go into details aside from saying management is "work[ing] diligently in an effort to address ongoing considerations relating to that business relationship."

"If those considerations are unable to be resolved during this 180-day notice period, Erlanger will seek proposals for the provision of radiology services," Goodrich said in an email. "In that event, Erlanger has and would continue to encourage TIIA to participate in that bidding process."

TIIA has provided interventional and diagnostic radiology services for Erlanger since 2014 and joins a growing list of providers and affiliates whose relationship with Erlanger has been challenged or terminated during Spiegel's tenure. Others include neonatology, cardiothoracic surgery and the University of Tennessee College of Medicine.

Erlanger's move to oust TIIA would potentially put 50 employees out of jobs, including radiologists, nurses, administrators and other staff, by July.

Three of those employees are stroke interventionalists. These specially trained physicians use medical imagery to guide catheters through the groin and remove blood clots, restoring blood flow to the brain. Erlanger needs a stroke interventionalist on call 24-7 to maintain its Comprehensive Stroke Center Certification.

Other major service areas threatened to be disrupted include pediatric and adult emergency services, oncology, general surgery, neurosurgery and neurology. TIIA also provides outpatient radiology services at Erlanger East and at Erlanger's Medical Mall.


Dr. Justin Calvert, Erlanger's chief of radiology and a TIIA partner, said he remains positive about TIIA's relationship with Erlanger despite the uncertainty.

"We are having ongoing, productive discussions with Erlanger's leadership and are hopeful that we will reach a resolution very soon so that TIIA can continue providing the top-quality care Erlanger patients expect and deserve," Calvert said.

Erlanger says its problem with TIIA is financial, but records paint a different picture.

Throughout 2018, Spiegel tried to negotiate with TIIA on behalf of the group's former partner - Baxter - who was appointed to Erlanger's board by Hamilton County Mayor Jim Coppinger in 2016.

Tennessee's Corporate Practice of Medicine law prohibits hospitals from directly employing radiologists, so given Erlanger's exclusive contract with TIIA, the group would need to rehire Baxter in order for him to practice medicine at Erlanger.

In September 2018, TIIA received a letter from Erlanger counsel offering a $750,000 stipend increase over five years, a five-year contract extension and an expanded termination notice period from 180 days to 365 days if the group obliged.

"All of these meetings and conversations in 2018 revolved around the resignation and hiring of an Erlanger Board of Trustee member," a letter to board members states. "TIIA can only conclude that the notice of termination has less to do with finances and more to do with Dr. Baxter's resignation from the group and Erlanger's insistence on rehiring him."


Although Baxter did not attend Erlanger's board meeting on Jan. 24, he remains on the board and is vice chairman of its Audit and Compliance Committee.

While the Erlanger board's bylaws contain a conflict-of-interest clause, the section pertaining to employment contracts between the hospital and board members is unclear.

Erlanger Board Chairman Mike Griffin said the board now has two trustees who are employed by Erlanger: Baxter and Dr. James Bolton, chief of the medical staff. However, the chief of staff always sits on the board.

"I think it's important for us to have trustees that have the medical knowledge that some of us from the business community don't have ... it could be a perceived conflict, but I think we work well," Griffin said.

Meanwhile, state Sen. Todd Gardenhire, R-Chattanooga, introduced a bill on Jan. 24 that would prohibit hospital authorities such as Erlanger from signing employment or service deals with trustees until at least 12 months after their tenure ends.

"If somebody's on a public hospital authority approving salary increases or benefits for executives of a hospital, you shouldn't be able to go work for that hospital for at least a year," Gardenhire said. "It's an obvious conflict of interest."

As the governing body of Erlanger Health System, Gardenhire said, Erlanger's board of trustees is "charged with a responsibility to act as a prudent person would act" in controlling the management and operations of the health system.

"Somebody trying to feather their own nest, whether it be on one side or another or on both sides, isn't acting as a fiduciary, which each one of those board members are," Gardenhire said. "I just think there's a good practice that there's a firewall between a board who's supposed to be independent and an executive director that might use assets of the hospital to forward their own personal or professional agenda."

Gardenhire said he hopes his actions will encourage the board to strengthen its bylaws.


A letter states that "good faith" negotiations surrounding Baxter "ended abruptly" with "no explanation" from Erlanger.

Then came the termination notice in January.

"TIIA is left confused regarding the mixed signals surrounding Erlanger's offer of an increased stipend followed just a few months later by notice of termination citing concerns about the current contractually agreed upon stipend," that letter states.

According to documents, Erlanger contests that TIIA gets too much money because of a $1.2 million increased annual stipend negotiated by Baxter while still a partner at TIIA.

But that stipend, based on a "fair market value assessment" conducted by Erlanger, is good through 2020, according to one letter that details the company's finances.

On Jan. 16, Erlanger's Medical Executive Committee, which is comprised of the chiefs of medicine and medical staff officers, sent a letter to the board expressing support for TIIA and stating that "a transition in radiology services could expose our patients to possible harm and disrupt key clinical services."

"Our medical staff is very pleased with the quality, timeliness, communication, and level of customer service that TIIA consistently provides," the letter says.

A local oncology group also wrote a letter to the board supporting TIIA and expressing fear that patient safety would be jeopardized by a change in radiology services.

Griffin, the board chairman, said he's taking all feedback seriously.

"We think a lot of this group," he said. "We've been kind of working on our side of it to get this resolved. ... It's an important relationship that administration has with the medical staff, and we're definitely working to improve that."

Contact staff writer Elizabeth Fite at or 423-757-6673.