Perhaps the many bad news headlines for Erlanger over the past year finally got the attention of the hospital's board of trustees and the folks who appoint citizens to serve on the board. Or maybe not.
The board on Thursday welcomed two new members, Vicky Gregg and Jim Coleman, but more importantly voted to adopt a new management incentive plan — a bonus plan — for fiscal year 2020.
Erlanger managers have not received incentive payouts since 2016. And when they did receive bonuses, to the tune of $2.7 million and $3.1 million in 2015 and 2016 (the then-CEO in 2016 got $800,000), the reaction among the public and local elected officials could not be called positive.
New board chairwoman Linda Moss Mines says this new plan "for the first time" weighs patient safety and quality over financial performance, with 40% of the plan weighted on finances and 60% tied to quality, safety and service.
"We are not happy with just where we have been. We want to be better," Mines said.
But the hospital's bottom line loomed large when the plan was discussed in detail during an earlier meeting on Monday. Erlanger's Chief Administrative Officer Gregg Gentry described incentive plans as "standard best practice" and "critical to recruitment and retention."
Another two-edged sword in the new plan is that it is "self-funded," meaning no awards will be paid unless Erlanger makes $5 million in excess revenue over expenses — and, yes, meets certain quality, safety and service metrics.
We term this two-edged because making money can mean paying fewer people — from nurses to doctors to janitors to managers or skimping on care somewhere along the way.
In the fall, looking at a nearly $9 million financial loss in six months, Erlanger ousted former CEO Kevin Spiegel, promoted its four-year chief medical officer to take his place and eliminated 30 managerial positions. Hospital officials say they don't expect to make more layoffs.
But before that restructuring, the health system had employed about 280 managers, meaning it still has 150 more managers than six years before. Meanwhile, for at least the past three years, physicians have complained about patient overcrowding, patient care waits and nursing shortages. Those unanswered complaints, the doctors said, contributed to "adverse patient outcomes" and led them in May to take a no-confidence vote on Spiegel.
If Erlanger makes money and meets quality metrics, the new CEO, Will Jackson, could receive a bonus of 15% to 50% of his $625,000 base salary, or $93,750 up to $312,500. Lower-tiered managers and directors have either 35%, 30% or 15% maximums for their potential rewards.
Incentive plans can be good if they help businesses achieve more than just a nice bottom line. That's especially true if you find yourself stretched out all night on a gurney in the hallway of the emergency department.
Time will tell if this incentive plan helps patients — or just Erlanger's top managers.