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Kevin Spiegel
Erlanger Health System officials will give 99 hospital managers half of $1.7 million in designated bonuses this month and the second half in July, hospital CEO Kevin Spiegel told employees in a memo Wednesday.

The bonuses are tied to performance benchmarks that the public hospital's board set earlier this year. But they have come under fire from local lawmakers and officials, who say the hospital had to tap a pool of federal money to end the year in the black.

State lawmakers also criticized the board for meeting and discussing the bonuses privately before voting in a public meeting on Dec. 4 to award them. The state's open records law says deliberations on public business must take place openly.

In response, the board said it would hold up the incentives and review the process. On Wednesday, the board said attorneys at the firm of Spears, Moore, Rebman and Williams had reviewed the actions. Board Chairman Donnie Hutcherson said in a news release that the "firm informed the Board members that the approval process was appropriate and the action taken by the Board was also appropriate."

Hutcherson could not be reached Thursday for comment.

Rep. Gerald McCormick, R-Chattanooga, said he and other local lawmakers who have appointed three trustees to the hospital's board still take issue with the way the decision was handled.

"I will say the board is made up of good people with integrity," McCormick said. "But I disagree with their decision."

McCormick said he "would not be surprised" if local lawmakers look into legislation that will define what board members must discuss in public meetings, or whether the hospital should be able to count $19 million in federal money it received this year, as operating income.

"That may be something the Legislature looks at going forward," McCormick said.

In his memo, Spiegel mentioned the possibility of creating a performance-based incentive plan for all employees to "recognize the contributions of the entire workforce."

He said the hospital has allocated about $15 million for raises in fiscal 2014-15. The board approved a 2 percent pay raise for "regular eligible" employees in January, and "eligible nursing associates" will receive the second phase of a two-step raise in July.

An incentive program could be announced to board members by January and take effect with the new fiscal year on July 1.

"I think this idea is great and commit to you that we will review a new compensation program," Spiegel wrote. "We will thoughtfully consider all alternatives."

But one Erlanger nurse, who asked to not be named for fear of retribution, said "employees have no faith in anything [executives] say."

Hospital employees say the executive bonuses are an insult after vacation accrual was frozen for several weeks earlier this spring, and after employees' and retirees' benefits were curbed or eliminated.

"Until they restore the paid time off that they took from us, which paid for those bonuses, no one will be satisfied. They have no credibility or respect from the staff," the nurse said.

Contact staff writer Kate Harrison Belz at or 423-757-6673.