Gardenhire: Safety of Erlanger's pension plan of top importance as new business model mulled

Staff Photo by Matt Hamilton / Erlanger hospital is seen on Tuesday, Dec. 15, 2020.
Staff Photo by Matt Hamilton / Erlanger hospital is seen on Tuesday, Dec. 15, 2020.

Sen. Todd Gardenhire, R-Chattanooga, has filed a bill that would allow Erlanger Health System to transition to a private nonprofit model, although the senator said he's still mulling over the proposed legislation to change Chattanooga's public hospital.

As of Tuesday morning, Gardenhire said Senate Bill 2932, which is co-sponsored by Sen. Bo Watson, R-Hixson, is a placeholder to buy some time as he makes sure his lingering concerns are addressed before moving the bill forward.

"Once we pass this bill, I have no way to get assurances that I need," Gardenhire said, noting that the biggest hangup for him has been guaranteeing the hospital's pension plan is safe.

In early March, the Hamilton County Commission passed a resolution requesting that Hamilton County's legislative delegation propose an amendment to the 1976 private act that created the Chattanooga-Hamilton County Hospital Authority - better known as Erlanger Health System.

The resolution asks for an amendment that would allow the county to dissolve the hospital authority so that Erlanger would be "owned and/or operated by a nongovernmental entity to promote the provision of high-quality health care services for years to come" if commissioners determine continuing to operate Erlanger as a hospital authority - which is a public entity governed by a politically-appointed board of trustees - is no longer "an effective or beneficial governmental function."

Delegation members have said that any change to the law must preserve Erlanger's safety net mission, ensure the hospital cannot be sold to another nonprofit group in the near future and protect current employees and retirees.

Rep. Patsy Hazlewood, R-Signal Mountain, with co-sponsor Esther Helton, R-East Ridge, filed a bill in the House last week that would fulfill the county's request. To become law, their legislation would require a companion bill like Gardenhire's in the Senate.

Though the House bill touched on the delegation's four key concerns, Gardenhire said he wasn't satisfied with the language.

With the General Assembly set to wrap up Thursday, members are running out of time to move new legislation forward.

"[The Senate bill] is just a placeholder until we can work out everything - if indeed we do work out anything," Gardenhire said Tuesday morning, acknowledging that he's been the hardest of the seven-member delegation to convince that the county's request is a good idea. "Hopefully, there will be an amendment filed that makes it very strong on the protection of the pension plan."

(READ MORE: Hamilton County delegation reviewing plans to make Erlanger private)

In a committee meeting later Tuesday, Hazlewood presented an amendment to her bill that would require the new nonprofit entity to "assume full responsibility" for Erlanger's pension plan by contributing at least 100% of the pension plan's annual actuarially determined contribution, following requirements established by the Pension Benefit Guaranty Corp. as well as other federal law, and fully fund the pension with the proceeds if Erlanger is ever sold.

Hazlewood said after the meeting that Tuesday's amendment represents "the end product as far as the House is concerned." All House members of the delegation have signed on as co-sponsors.

Gardenhire said previous Erlanger CEOs and boards did not fund the pension appropriately and have cut retirees' benefits when the hospital fell on hard times.

Though he said the current Erlanger trustees are "honorable and have shown great leadership in the past 12 months," they won't be around forever.

"I've learned from past experiences - trust, but verify - and my No. 1 goal is to make sure the pension people are taken care of - the retirees," Gardenhire said. "I'm going to hold out until I make sure the pensioners are protected to my satisfaction."

Contact Elizabeth Fite at or 423-757-6673. Follow her on Twitter @ecfite.

Staff Writer Andy Sher contributed to this report.

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