What's old is new again. Erlanger Health System is no different. Once again we're witnessing see-sawing finances and managerial musical chairs — this time with 30 eliminated managerial positions after a nearly $9 million financial loss in six months.
Just over a month ago, Erlanger ousted six-year CEO Kevin Spiegel, and within a week — without even a pretense of a search — the hospital's board of trustees installed four-year chief medical officer, Dr. William Jackson, as the new CEO.
The board said the move to change the CEO was precipitated by a May 9 physicians' no-confidence vote in Spiegel due to problems in the emergency department that contributed to "adverse patient outcomes" — problems Jackson was specifically tasked with handling.
Doctors said their concerns — chronic operational issues, such as understaffing, overcrowding in the emergency department and operating rooms, inefficiency and poor morale and policies — consistently fell on deaf ears. They also wrote that patient overcrowding at the main campus emergency department "has resulted in prolonged boarding of patients and difficulty in appropriate staffing, which has unfortunately contributed to adverse patient outcomes."
Today we see the more likely real motivator for new management actions: Money.
Erlanger on Monday eliminated 30 positions as new financial reports revealed the hospital ended fiscal year 2019 with a $4.4 million loss and the first quarter of fiscal 2020 with a $4.5 million loss.
This is interesting information, given that in the aftermath of the physicians' no-confidence vote, we heard a lot about there being not enough workers, specifically nurses. We were told that the nursing shortage was a situation that contributed to the clogged patient flow in the ER, and from the ER to patient rooms. What we didn't hear anything about was financial losses.
If you're sensing something less than transparency, you're not alone.
Times Free Press reporter Elizabeth Fite reports that when former CEO Kevin Spiegel took the helm in 2013, Erlanger had fewer than 100 employees who were considered management. Before Monday's layoffs, the health system employed about 280 managers.
Even with the elimination of 30 positions, that still leaves 250 — 150 more than six years ago. And Erlanger Board Chairman Mike Griffin said no more layoffs are planned.
We wonder: Did the board not have to approve the addition of those many management positions through Spiegel's reign? If not, why not? It does seem the board had input on the layoffs: "Dr. Jackson has the full support of the Board in making these very tough decisions," Griffin said.
In fairness to Erlanger, the management and oversight of the 10th largest public hospital in the nation cannot be an easy lift.
Our reporting notes: "Despite the hospital's lackluster financial reports, independent auditors found the number of patients coming to Erlanger continued to grow at a rate that outpaces the market. For the last five years in Tennessee, Erlanger has led the state in patient growth, with a 38.6% overall increase. The next closest health system was in the low 20% range for the same time period, according to the audit report."
That growth is part of Erlanger's troubles — both in patient and cost problems. In part, what we see is a hospital struggling to meet needs as smaller and rural hospitals close — a consequence of the Trump administration, the long-time GOP majority in Congress and the very red Tennessee General Assembly chipping away at the Affordable Care Act and Medicaid, the government insurance program for the working poor and people who are uninsurable.
But let us say again — all that is new is not really new. We're accustomed to wild swings in Erlanger's bottom line. We're accustomed to rocky leadership transitions. We're accustomed to extravagance in Erlanger's management costs.
In the past 25 years, Erlanger has had five chiefs. All, it seems, were shown the exit by Erlanger's board of trustees. Four of the ousted CEOs received severance, settlements or court judgments — altogether tallying nearly $2.3 million.
The Erlanger board that ran through all those CEOs is also the governing body that surely approved the rapidly rising number of managers and more recently supported the elimination of 30. (We hope the savings will be directed to the emergency department and nursing care.)
It's also the board that through the years has been a rubber stamp for staggering managerial bonuses.
In December 2016, the Times Free Press wrote that 161 of Erlanger's managers would divide about $3.1 million in incentive pay — aka bonuses. In 2015, the bonuses for its top 124 executives tallied $2.1 million. In 2014, 99 top managers got $1.7 million in Christmas money. If you do the math, that meant manager bonuses averaged about $17,000 to $19,000 each per year. Meanwhile, at least in 2016, the ordinary Erlanger employees got $400 in "incentive pay" and Spiegel's bonus was about $800,000. (Erlanger managers haven't received bonuses in more recent years.)
It's nice work if you can get it.
And if we're talking about the soft-touch Erlanger trustees, you might not have too much trouble getting it.