Opinion: Does Erlanger's need for flexibility portend other changes down the road

It's all about flexibility, the Erlanger Health System Board of Trustees says.

Nevertheless, loosening the system's conflict of interest provisions is a step we wish the board hadn't taken.

Late last month, the trustees voted unanimously in a public meeting to change their bylaws barring trustees or any business entity in which a trustee has a controlling interest from being employed by or contracting with Erlanger until at least two years after the trustee's service is complete.

The new wording allows them to grant an exemption to the previous bylaws to employ a trustee "in extraordinary circumstances" before those two years are up.

"Trustees, throughout their tenure, are in a unique position to acquire a combination of experience, expertise and insight into areas ranging from [Erlanger's] operations, [Erlanger's] strategic planning and the community's values," the resolution authorizing the change reads. "In light of such experience, expertise and insight, and the time and resources required to recruit new key employees and familiarize them with the [health system], the board recognizes the need for additional flexibility to allow [Erlanger] to employ trustees, upon completing their tenure as trustees, particularly when [Erlanger] is facing extraordinary events."

The extraordinary circumstances could include unexpected or planned events that occur outside the typical course of operations for Erlanger, such as "mergers, acquisitions, divestitures, reorganizations or restructurings."

Well, it just so happens the hospital system is exploring a sweeping corporate restructuring, moving from being a quasi-government entity to a private, nonprofit organization.

Such a move will require permission from the Hamilton County Commission but, most critically, from the county legislative delegation, which authorized the system's current governing structure around 45 years ago.

Erlanger executives told the Times Free Press editorial board earlier this year they hoped a new governing structure could be completed and passed by the legislature before its adjournment this spring. With the legislature rapidly moving toward the completion of its work, that hope looks dim.

Nevertheless, legislative delegation members may not be happy with the relaxed conflict of interest provisions. After all, the board's most recent change to the provisions in 2019 was to strengthen them. State Sen. Todd Gardenhire, R-Chattanooga, had proposed a bill increasing the time before a trustee could be hired at the hospital from six months to a year. He eventually pulled the bill, but the board increased the time to two years, expanded the provision to include contract work by trustees and made exceptions for physicians who practice at the hospital and the medical chief of staff (who is a trustee).

Prior to both occasions when the board increased the time for trustees to be hired, in 2002 and 2019, overtures had been made to former trustees for a specific post or for contract work.

In our thinking, the trustee-to-hire pipeline is just too cozy, even if it's in "extraordinary circumstances." Even if nothing untoward is intended, the public may wonder what was said behind closed doors that wound up in a trustee being hired.

While we understand the hospital system's desire to rethink its governing structure to be more nimble in a competitive marketplace, its purchasing and its hiring, we think the public may see the loosening of the conflict of interest provision as the beginning of loosening in other areas.

As we wrote when the area's only public hospital system broached changing its governing structure, we think the public could rightly wonder about Erlanger loosening its commitment to providing indigent care, cutting back or eliminating services and/or employees, and absent the scrutiny of public board meetings, making decisions it would not have made if watchdogs weren't present.

We admit Erlanger officials allayed some of our fears with promises about not discontinuing services and continuing its "mission" of uncompensated care, but the change in the conflict-of-interest provision gave us pause.

Again, we hear the board saying it's just "flexibility," it's a little wiggle room, that it's "strategic," that it makes the hospital more nimble. But since the exact parameters of the hospital system's independent nonprofit governance haven't been fully established, we'll continue to be skeptical. Our concern may be much ado about nothing, but we don't know yet.