Roy Exum
Long before the Erlanger Hospital Board of Trustees approved $1.7 million in bonuses to top-tier management this week, Tennessee Governor Bill Haslam directed all department heads in state government to reduce their budgets by 7 percent. This is why TennCare has just announced it will cut $165 million in spending and that figure, when combined with what would have been matching federal grants, will actually be more like $400 million less than was available across the state last year.
According to the Nashville Tennessean, “The proposed budget eliminates grants to safety-net hospitals (like Erlanger,) ends funding for babies born with health problems (like at Erlanger,) halts coverage of hospice services (like at Erlanger,) and limits in-home assistance for the elderly to those poor enough to qualify for Supplemental Security income. Doctors (like at Erlanger) and other health providers would get hit with a four-percent reimbursement reduction. Other cuts include funding for medicines (like at Erlanger) and mental health services.”
That noted, it is commonly known the state of Tennessee does not participate in the federal Affordable Care Act. So the millions of dollars that would otherwise flow into the state coffers – regardless how you feel about the federal program – are not available. Forgive me when I say I’m thinking the sun and the moon may be aligning with the stars to create a perfect storm of sorts over the East Third Street campus.
To his credit, the governor has said the TennCare cuts will face a review before becoming finalized. “That does not mean we will take all those cuts,” Haslam told the Tennessean. “Those are not offered up lightly, and we would not be taking them lightly. Some things I can understand the impact of. Some things I can’t,” the governor said. “We will have to follow up with that.”
Whether the state’s health industry will take a $400 million hit isn’t yet known but the consensus is hospitals like Erlanger may be severely hurt by statewide TennCare cuts. As you fret how this will affect a medical center that this year will be forced to absorb about $90 million in indigent care costs, let’s consider the fact Chattanooga’s legislative delegation is genuinely and totally miffed over the Board of Trustees’ most recent behavior. "It will be difficult for Erlanger to come back and ask anything of us going forward," state Senator Todd Gardenhire told reporters.
Wait…it gets worse. County Mayor Jim Coppinger said the county commission gives the hospital $1.5 million annually in taxpayer money but told WTVC reporter Briona Arradondo. “I have learned that this was a commitment made by the board. I think the timing of it is really disappointing," said Coppinger. “The board had a third party commitment that said that if they met certain goals then were would be these incentives that would be given to these managers.”
"We know that Erlanger has been successful over the last 12 months, and we know that the federal dollars were big this year. But that is not going to be a steady revenue source," he said. "I am just disappointed we did not give it more time."
More time indeed! Board member Jennifer Stanley told the Times Free Press, “We set fiscal year 2014 targets long before anyone had any idea that access to the [federal] supplemental pool would become a reality," she explained. "We owe management the incentives we promised over a year ago. Not to pay would be an egregious moral and ethical violation, in addition to destroying trust between the board and management."
Leaping lizards, who promises incentives at any company that has performed for years in the red? One miffed nurse, a longtime employee, says morale has never been as low. “We were told after a staff member returned from a ‘Service Excellence’ meeting that none of the nursing staff is getting the promised January 2% raise.
“We all had received a letter mailed to our home address stating, we thought, that all nurses who were not in the ‘limited’ group who received a raise last July, would get the board approved 2% raise,” she wrote. “
Now we are told ‘What were you thinking? You aren't getting a raise …’ It’s almost like, were did you get that from?! The anger was high, to say the least.”
Kevin Spiegel, Erlanger’s CEO, was awarded a bonus of $234,669 and the Board also agreed to a 10 percent pay raise on his salary of $680,000. “A 10 percent pay increase is a recurring expense to a hospital that has struggled to meet its financial targets for a number of years," Watson told NewwsChannel9's Arradondo.
"If there were revenue incentives, which I assume there probably were, then it begs the question does a $19 million gift from the federal government constitute a change in operations that enhances the hospital's revenue. I think many on our delegation would say it does not."
Both Watson and Gardenhire are looking at changes in legislation that currently allows the hospital board to meet privately on certain topics, such as business strategy and monetary issues. Watson said the legislation might soon reconsider such laws.
“Should the law continue or has Erlanger taken advantage of the law to give them the opportunity to do strategic planning outside the public view and use that to have other discussions as well as poll members vote on how they might vote on a particular issue?" he asked a pointed question.
Erlanger is exempt from the Hospital Assessment fee that accompanies TennCare but the lawmakers will review that as well. “If they are using those kinds of revenues as targets to create incentives for top level executives, then it begs the question of, 'How well are they utilizing that hospital assessment fee?'" said Watson.
Now let’s add a last factor. The Consumer Financial Protection Bureau announced Thursday that 42.9 million Americans have unpaid medical bills averaging $1,766. That means 20 percent of American consumers are faced with debt collection, falling credit scores, and the like. If someone has medical bills plus credit-card debt or back taxes, the average owed is $5,638.
Get this: if the indigent costs at Erlanger are now almost $90 million and TennCare is soon sliced, the hospital still cannot in good conscience turn anyone away who needs primary care. This means indigent care is going to get much, much worse and burdensome. With 42.9 million Americans already in debt for medical-care costs, the coming wave of those unable to pay in a state that doesn’t recognize the Affordable Care Act could very well be enough to drive Erlanger back into the red by this time next year.
But unlike last year, politicians like Senator Gardenhire are publicly stating, “It will be difficult for Erlanger to come back and ask anything of us going forward.”
Ain’t that dandy? Talk about a Perfect Storm.
royexum@aol.com