The Erlanger Health System Board of Trustees approved two changes to the group's bylaws Thursday, one of which allows trustees to be employed by or contract with the hospital in certain circumstances.
The change, passed unanimously in a public meeting Thursday morning, comes as the board explores changing Erlanger's structure from a governmental entity to an independent nonprofit organization. Such a change will require support from both the Hamilton County Commission and the legislative delegation.
Jesse Neil, a health care attorney with Nashville-based Waller Law, told the board by teleconference the change would give it some increased flexibility as it potentially undergoes a major change. Neil began representing the Erlanger board in August 2021 and is helping navigate efforts to restructure the health system.
Previously, the board's bylaws contained conflict of interest provisions that barred 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, without exceptions.
Though those same provisions remain intact, trustees can now decide to grant exemptions if they deem necessary in "extraordinary circumstances."
Neil said having a "narrowly tailored exception" to the rule in extraordinary circumstances could help in Erlanger's restructuring effort.
"Trustees, throughout their tenure, are in a unique position to acquire a combination of experience, expertise and insight into areas ranging from the [Erlanger's] operations, [Erlanger's] strategic planning and the community's values," said a copy of the resolution authorizing the bylaw changes. "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."
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."
Both the board and Hamilton County Mayor Jim Coppinger have said there are no plans to sell Erlanger or join another hospital system. But trustees in the past have said it's difficult for Erlanger to pursue certain business ventures because most private companies don't want to partner with a governmental entity that's subject to open records and transparency requirements.
Erlanger is governed by an 11-member board of trustees who serve without compensation. The Hamilton County mayor appoints six trustees with the County Commission's approval, and the local legislative delegation appoints four trustees by a majority vote from the Tennessee General Assembly. The medical chief of staff also serves as a trustee. Trustees are appointed for an initial four-year term and may serve for no more than eight consecutive years.
The board also unanimously passed a measure to make permanent the Board, Medical Staff and Executive Management Relations Committee. The committee was formed on a temporary basis amid physician backlash over the board's decision to remove Chief of Staff and fellow Trustee Dr. Chris Young from both his chief and board member roles over allegations he shared unspecified confidential information.
Trustee Sheila Boyington, vice chairwoman of the board and chairwoman of the legal committee, thanked Trustee Lemon Williams, who chaired the committee, for his work on the panel.
"We feel that this is important for us to act on, to make sure that we signal to the community - the Erlanger community and the community at large - that this is important and we recognize that," Boyington said.
The relations committee is to be comprised of at least one trustee, at least one member of the medical staff and at least one member of executive management. One of the members appointed from the board will serve as the chairperson.
Board Chairman Jim Coleman and Trustee John Germ were not present for the Thursday meeting.