From the Chattanooga Times Free Press (reprinted with permission).
By Kate Belz
When Erlanger hospital’s trustees take up the issue of executive bonuses at their board meeting tonight, the main reaction they want to avoid is surprise.
They know all too well the effects of surprise. For nearly six months, the $1.7 million in bonuses Erlanger’s board agreed to pay out in December has been the target of loud criticism from state and local officials. It triggered a high-profile rulingfrom Tennessee’s attorney general, who found that the board violated open meetings law by discussing the incentives behind closed doors before the meeting. The bonuses even spurred a bill this legislative session that attempted — but failed — to tighten the guidelines under which public hospitals could have closed meetings.
“I think the overall lesson here is that the public doesn’t like to be surprised by decisions that a governing body makes,” said Deborah Fisher, executive director of the Tennessee Coalition for Open Government. “When things are done out in the open and in a transparent way, you build more understanding and trust.”
By holding a “do-over” vote tonight, trustees hope to finally start over. It’s expected the board will approve the bonuses again, but the vote itself is an important step in rebuilding trust, Fisher said.
Board chairman Donnie Hutcherson could not be reached for comment Thursday.
Leading up to the second vote, the board held a three-hour public meeting about how the incentives work, delayed an initial re-vote to allow for more time, and published the agenda with the bonus resolutions well before today’s meeting.
Half of the bonuses have already been paid. But the vote — even if it’s just a formality — is necessary to avoid a lawsuit challenging the board’s actions at the Dec. 4 meeting, said state Sen. Todd Gardenhire, Erlanger’s most vocal critic during the controversy.
At this point, Gardenhire says he trusts the board has “fully vetted” the issue.
“I think the [trustees’] tone is different now, and they see we were very serious about shedding some sunshine on this,” Gardenhire said.
Hospital officials even have begun discussions with Gardenhire about possibly reimbursing Erlanger retirees who were cut off from the hospital’s insurance plan last December, an action that greatly upset Gardenhire.
“I told them, ‘In order for them to be able to work with Todd Gardenhire, they are going to have to do the right thing by these retirees,'” Gardenhire said.
Erlanger in March enlisted the help of Claude Ramsey, the former Hamilton County mayor who recently started his own government relations firm, River Branch Strategies. Ramsey will help with a number of politically related issues — including rebuilding relations with the legislative delegation. Erlanger is paying him $5,000 per month.
“Our board really wanted to repair relationships with the legislative delegations, and Claude helped facilitate some of those discussions,” said Steve Johnson, Erlanger’s vice president of government relations.
In tonight’s vote, the board will decide whether to disburse $1.7 million to 99 hospital managers and to raise CEO Kevin Spiegel’s salary by 10 percent, bringing his base pay to $748,000. They also will consider a nonbudgeted 2 percent raise for most hospital employees.
After the December vote, trustees stressed that the bonuses were not arbitrary, end-of-the-year add-on money, but calculated amounts tied to predetermined goals.
Erlanger saw a drastic financial turnaround in 2014, due in part to $19 million in new federal funding.
The recent memory of the hospital’s financial struggles and the federal funding connected to its recovery helped drive some of the ire about the bonus payouts. But lawmakers were chiefly upset that the incentives came as a surprise to the public and were added to the board’s agenda hours before the board meeting.
Public hospitals are allowed by law to discuss strategic plans in closed meetings, but Tennessee attorney general Herb Slatery III ruled that executive pay does not fall into that category.
Contact staff writer Kate Belz at email@example.com or 423-757-6673.