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NASHVILLE — Amid continuing financial losses at the Southside and Dodson Avenue community health centers, Erlanger Health System on Wednesday fired the four top administrators and now plans to dissolve the federally qualified health centers' board.

Erlanger CEO Kevin Spiegel said in an interview the moves came after the centers, which serve uninsured and underinsured Chattanoogans, suffered more than $2 million in losses in the fiscal year that ended June 30.

"They lost an additional $2.3 million," Spiegel said. "Myself and my team have made it clear that is unacceptable fiscal management. And they [four top managers] have been removed effective today."

Moreover, there were issues with patient satisfaction, Spiegel said.

Erlanger, a public hospital, is now moving to the co-applicant agreement it and the board have with the U.S. Health Resources and Services Administration government.

Spiegel stressed repeatedly in the interview that health services will not be interrupted. In fact, he said, Erlanger intends to improve services. The physical structures are owned by Erlanger. Physicians, nurses, technicians and others are Erlanger employees, he said.

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Erlanger Health System's CEO Kevin M. Spiegel

Erlanger Senior Vice President Joe Winick, who previously worked at the centers, will assume the lead role at the health centers on an interim basis.

The centers have a $2.3 million grant from the U.S. Health Resources and Services Administration under an agreement regarding federally qualified health centers. But in the last fiscal year, Erlanger had to inject an additional $1.5 million to shore up operations. And the final straw was having to make up an $800,000 loss.

Spiegel informed state Sen. Todd Gardenhire, R-Chattanooga, and Rep. JoAnne Favors, D-Chattanooga, about the moves in a telephone conference call. Gardenhire is chairman of the county's legislative delegation at the state Capitol. Favors, a retired nurse, once headed one of the centers.

Gardenhire, who has been critical of some Erlanger moves, said that in this case, "basically, we as a delegation don't want to micromanage over at Erlanger. Kevin gave us assurances they would keep those two facilities open and health care [would] improve.

"If Erlanger does something right, we're going to support them and this is one of the cases where we will," Gardenhire added.

Spiegel also "mentioned they were having conflicts with the board of the centers," Gardenhire said.

Efforts to reach Favors were unsuccessful Wednesday.

When contacted, one member of the center's board declined to discuss Erlanger's actions. Another did not return calls and efforts to reach others were unsuccessful.

"We met with the leadership of HRSA in Washington on Friday and we laid out a plan for them that dissolved the co-applicant agreement," Spiegel said in the interview. "It's a requirement under the HRSA grant. And we let them know we were dissolving that [board] and we were going to reinstitute both the management of the health centers and eventually the governance of the health centers.

"We made [the situation] clear to HRSA," Spiegel added. "None of this is going to hurt patient care."

HRSA requirements for the agency's grants call for community boards. Fifty-one percent of the board members come from members of the community served and/or patients. The local board was Erlanger's co-applicant for the grant for years. Other members can include hospital staff.

Spiegel said the current HRSA grant extends through next March. While Erlanger remains interested in future federal funding, it's unclear whether HRSA officials will go along with that.

The centers have gone through periods of turmoil for at least the last 4 1/2 years. In 2012, the centers contracted with a Knoxville health management company, only to have that end a year or so later with a subsequent lawsuit.

In an email to Erlanger employees, Spiegel explained the HRSA grant funded partial expenses for the centers. But the centers continued to "far exceed the revenue."

He said in discussing the financial problems "and other issues faced by the health centers," Erlanger's leadership "presented a plan to change the governance and management team of the centers."

The plan will expand primary health care, add school and pediatric programs, improve educational outreach and enhance dental services, Spiegel wrote.

"The health centers will also provide patients with increased access to physicians within Erlanger's primary care network," he added.

He thanked the centers' board chairman, Erskine Olgesby, and other board members.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.

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