The Erlanger Health System Board of Trustees unanimously agreed Thursday to allocate $13 million toward nurses' base pay in an effort to recruit and retain those employees amid a nursing shortage that's hamstringing hospitals across the nation.
The funds will result in a 10% or more pay increase for Erlanger's roughly 1,500 hospital-based registered nurses and more than 300 on-call nurses, according to Erlanger officials. Nursing pay increases will become effective Feb. 5.
Speaking during a hospital board meeting Thursday, Chief Nurse Executive Rachel Harris said that while there's an overall need for hospital-based employees, the most pronounced worker shortage is nurses.
Many hospitals contracted with high-cost travel nurses to weather the pandemic, but Erlanger made the decision to forgo that staffing model and instead offer incentives and overtime pay to current staff and use internal contracts.
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Erlanger Chief Financial Officer Lynn DeJaco said during a budget and finance committee meeting Monday that Erlanger has seen a "dramatic increase" in labor costs since July, due in part to the hospital opening 47 beds that had been closed due to limited staff.
"The opening of those 47 beds came at a cost, and the cost is paying higher rates to get the staff in to serve the patients," DeJaco said, noting that during that time period Erlanger also hired a net increase of 202 full-time equivalent employees. Most of those hires were for clinical as opposed to administrative staff, she said.
Although Erlanger officials stand by the decision to turn to staff who already knew the health system rather than bring in outsiders, Harris said the current method of relying on incentives and overtime pay to meet the region's health care needs is not sustainable.
"We recognize that it is time to implement a more permanent solution so that we can re-establish our bed capacity closer to pre-pandemic levels and fully meet the health care needs of our community," Harris said during Thursday's board meeting.
Even before pandemic burnout drove many hospital-based nurses into other fields, industry leaders feared a crisis-level nursing shortage loomed as more baby boomers age out of the workforce and the growing number of older adults increases demand for health care services. The U.S. Bureau of Labor Statistics projects an average of 203,200 job openings for registered nurses each year over the decade.
Erlanger officials said they're looking to hire 100 or more inpatient nurses, with the greatest need being for nurses able to care for adults who are sick or preparing for and recovering from surgery.
Erlanger trustee Dr. Mitch Mutter said during the meeting that while he strongly supports a pay increase for nurses, the issues of nurse retention and burnout can't be solved with money alone.
"We now have babies teaching babies in terms of nursing staff," Mutter said. "We don't have the seasoned people that we used to have."
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Harris agreed with Mutter and said the pay increase is intended to not only recruit and retain current staff but entice former Erlanger nurses who left the health system to come back.
"The best recruitment tool is our alumni and talking to those nurses that have been here before," she said. "And we hope to be able to capture some of those nurses that work in a temporary period status that will commit to us full-time."
Erlanger CEO Jim Coleman told the Chattanooga Times Free Press that he expects the $13 million funding shift to permanent nursing pay to be "budget neutral" in that it will offset how much Erlanger is spending on incentives and overtime.
Hospital officials said they're hoping that the historic pay increase combined with Chattanooga's lower cost of living will also draw nurses from larger markets such as Nashville and Atlanta.
Despite Erlanger's mounting expenses, which due to inflation stretch far beyond labor, the health system was able to finish the second quarter of the fiscal year that began July 1 with a net income from operations of $5.6 million.
DeJaco attributed Erlanger's continued positive financial performance to tight expense management and treating more patients in key areas, such as surgeries and regional transfers to Erlanger for specialty care.
Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.