Tuesday, September 23, 2014 · 10:25 a.m.
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Legislation to revamp Erlanger's governance system will go to committee members Tuesday. (Photo: Staff)

This week, state legislators will consider a bill that aims to restructure the governance structure of Erlanger Health System. 

"[This legislation] has been a long time coming," Rep. Gerald McCormick, R-Chattanooga, who is sponsoring the House version of the legislation, said. "We've been working on this for over a year now. It's a result of some problems we've seen at Erlanger, [such as] turnover in CEOs. And the way the board is set up, it makes it more difficult to operate." 

In November 2011, Jim Brexler announced his plan to retire as president and CEO of Erlanger Health System.

Charlesetta Woodard-Thompson has been interim CEO since then. 

The new proposed legislation is meant to address the way the board operates and ultimately the profitability of the hospital. 

"Erlanger has lost a lot of money," McCormick said. "Part of the problem is they are paying CEO packages to go away. That indicates the board is operating under a system that can be improved." 

Erlanger ended the fiscal year on May 31 with a $15.2 million loss, according to Nooga.com archives. 

Erlanger is projecting a $3.5 million profit in the next fiscal year and a 4.3 percent growth in patient admissions. 

Erlanger's Health System is currently governed by a board of trustees that consists of 12 members, who serve without pay, according to Erlanger's website. 

Leaders such as the city mayor, county mayor, the legislative delegation and the president of the Chattanooga-Hamilton County Medical Society appoint trustees to the board.

Trustees are currently appointed for an initial four-year term and may serve for no more than eight consecutive years, also according to Erlanger's website.  

But this appointment system can lead to trustees having too much interest in the opinions and concerns of those who appointed them. 

There has been speculation that some doctors have been unhappy with Erlanger's surgical facilities and preferred working at other local hospitals. 

Surgeries are moneymakers for hospitals, and, over the summer, when Erlanger leaders approved the $27 million budget—which was a $27 million capital budget and $10.8 million for operations—they said that investment in surgery is key.

Seventy-one percent of the budget is invested in clinical services, such as surgery, according to Nooga.com archives. 

Erlanger has already been working to woo surgeons and doctors by investing in infrastructure, from bed expansions to new operating rooms, also according to Nooga.com archives. 

The House bill number is HB0107.

The companion bill in the Senate—SB0139—is sponsored by Sen. Todd Gardenhire, R-Chattanooga. 

The bill will go before the House State Government Committee at noon Tuesday, McCormick said Monday afternoon. 

"Hopefully, it will go through there," he said. "I don't imagine there will be any objections."

If it passes through that committee, leaders will schedule a date for the legislation to go before the Calendar and Rules Committee, McCormick also said. 

According to the news release, key provisions of the bill include:

—A new community board of trustees will be established, consisting of nine members reflective of the community. It will include seven voting members, plus one nonvoting representative of academia and one nonvoting physician member with current or past staff privileges at Erlanger. 

—The board will be self-perpetuating, similar to most corporations and nonprofit organizations. Upon the vacancy of any seat for any reason, the remaining board members will fill the vacancy by majority vote.

—Except for the initial voting members of the board and chair appointments, which will be made jointly by the Hamilton County Legislative Delegation in consultation with the Hamilton County mayor, political entities will not be responsible for appointing trustees.

—The newly reconstituted board will then appoint the academic and physician members, with the physician member to be appointed after consultation with the Chattanooga and Hamilton County Medical Society.

—Trustees will serve a three-year term, and no member may serve a total of more than three terms. Initial members of the board shall serve staggered terms.

—Though the board may create other committees it deems necessary, audit and finance committees must be established.

—The legislation would remove provisions that are either unnecessary or addressed in other statutes under state law.

—The board is specifically directed to adopt policies and procedures to ensure the authority purchases goods and services at competitive prices and avoid conflicts of interests among the board, management, and current or potential vendors.

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