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Erlanger hospital's top seven executives pocketed more than $472,000 in bonus pay this month, based on the hospital's performance last year.

That's about 28 percent of the $1.7 million in total bonuses awarded to 110 management-level employees this year. These "incentive payments" aren't awarded on a whim; they depend on achieving predetermined performance criteria, Gregg Gentry, senior vice president for human resources, said.

CEO Jim Brexler received a bonus of $198,006, on top of his $550,000 base salary.

The Chattanooga-Hamilton County Hospital Authority's management and board evaluation committee sets the criteria on whether and how much incentive pay will be awarded.

Committee Chairwoman Kim White said the bonuses are appropriate.

"In a very challenging environment and a very challenging industry, for the hospital to do as well as it did I think that management deserves a pat on the back," she said.

In July Erlanger's 4,500 employees received a 3 percent pay raise, the first across-the-board raise since 2007.

Erlanger's incentive payments and CEO salary are in line with other hospitals of Erlanger's size, said Jim Nelson of Missouri-based Integrated Healthcare Solutions, formerly Clark Consulting. Erlanger hired the company to come up with the incentive pay standards and evaluate salaries.

In 2009 the median CEO salary at a hospital Erlanger's size was $560,000, and the median incentive payment was $140,000, he said.

About a quarter of hospitals lost money in 2009 and likely many of those awarded no incentive payments, he said.

The hospital had an operating profit of $10.8 million in 2009, compared with a loss of $15.4 million the year before, financial records show. No hospital executives got bonuses in 2008, Mr. Gentry said.

In the first three months of the current fiscal year, Erlanger posted a loss of $1.6 million, compared with a budgeted profit of $2 million.

MEETING CRITERIA

The hospital and employees must meet certain standards for bonuses to be considered. Those standards include generating a profit at the end of the fiscal year, maintaining accreditation under the Joint Commission -- an independent, nonprofit commission that accredits health care facilities -- and achieving bond covenants, Mr. Gentry said last week.

If these criteria are met, employees become eligible for bonuses based on meeting or exceeding targets in categories such as operating margin, emergency department wait times, patient satisfaction ratings, and quality indicators such as infection rates.

The criteria used this year were approved by the board in November 2008.

The hospital's operating margin in 2009 was about 2.13 percent, which exceeded the minimum target of 1.96 percent that the board had determined would warrant incentive pay in that category.

Operating margin is weighted at 35 percent of all criteria that determine incentive payments.

Included in the hospital's income last fiscal year was $3.4 million in disproportionate share payments and trauma funding from the state based on services provided in 2008, hospital officials said. The hospital received those payments late so the revenue was included in 2009's reports.

Without those payments the hospital's profit margin would have been 1.46 percent.

Management and board evaluation committee members are considering revamping the criteria that determines bonus pay for this year. The committee is interviewing other consulting firms that would help determine new criteria, as well as evaluate executive salaries.

The committee will consider raising the requirements that must be met to earn incentive payments, said trustee and committee member Jim Worthington.

"I think we have to better challenge those who are eligible for" incentive payments, he said. "In fairness to the people of Hamilton County we owe ourselves the right to bring in other firms and as a board be satisfied that we set up metrics that will be challenging to all."

Mr. Brexler's base salary has not increased since 2007, when trustees voted to raise his pay from $360,009 to $550,000.

Memorial Hospital former CEO Ruth Brinkley -- who left at the start of 2008 -- earned $518,213, plus $200,802 in benefit plan contributions and an $11,400 expense account, according to 2006 IRS records, the last year for which data is available for a full-time CEO at the hospital.

Jim Hobson was named CEO in November 2008.

PDF: Management performance metrics

INCENTIVE PAY

Based on the hospital's performance in the fiscal year that ended in June, Erlanger management employees received incentive payments this month:

* Jim Brexler, CEO -- $198,006

* Charlesetta Woodard-Thompson, chief operating officer -- $56,701

* Britt Tabor, chief financial officer -- $40,611

* Lynn Whisman, chief nursing officer -- $36,901

* Dr. Cy Huffman, chief medical officer -- $54,001

* Dale Hetzler, chief legal officer -- $47,701

* Alana Bloom Sullivan, chief compliance officer -- $38,522

Source: Erlanger

PERFORMANCE CRITERIA

Last week Erlanger trustees approved the criteria that will determine incentive pay this year.

* Operating margin: 35 percent

* Quality of care: 25 percent

* Patient length of stay: 15 percent

* Patient satisfaction: 15 percent

* Emergency department wait times (arrival to discharge): 10 percent

Source: Erlanger

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