Hospital’s payout of executive bonuses irritates legislators

State legislators and Hamilton County officials are criticizing a decision by the Erlanger Health System’s board to pay $1.7 million in bonuses to executives and management after a period of financial turmoil, reports the Chattanooga TFP.

“I felt betrayed. I felt embarrassed ” said state Sen. Todd Gardenhire, R-Chattanooga. He said the decision flies in the face of the work local, state and federal lawmakers did to help procure $19 million in federal funding, money that contributed directly to the hospital ending the year in the black.

“It will be difficult for [Erlanger] to come back and ask anything of us going forward,” Gardenhire said.

Erlanger trustees approved a series of last-minute resolutions Thursday to pay out the incentives to 99 managers. They include a $234,669 performance incentive for (CEO Kevin) Spiegel, bringing his total compensation this year to $914,669. Trustees also voted to give Spiegel a 10 percent raise next year, and approved a 2 percent nonbudgeted pay raise for hospital employees.

The payouts were tied to a series of financial benchmarks set up more than a year ago. Still, state Sen. Bo Watson, R-Hixson, said he was “stunned” by the move, given the hospital’s recent financial history.

“A year ago, this administration, this board was before us, hat in hand,” Watson said. “This delegation went to bat for this hospital system. And now this.”

Members of Hamilton County’s legislative delegation said they plan to discuss the Erlanger payouts today when they meet with county officials to discuss the upcoming legislative session. Several members said they plan to take “some kind of action” in response to the incentive payouts, though they were not specific.

“Tennessee has a hospital assessment fee. Erlanger’s exempt from it. Are we just providing bonuses for people? What do we do with that?” Watson said.

The delegation has been involved in several recent Erlanger-related measures, including the hospital’s recent efforts to gain 501(c)(3)-like nonprofit status. Rep. JoAnne Favors, D-Chattanooga…said Monday that the board’s decision reinforces her position not to support any bill that grants the hospital more independence. She said she took several “deeply troubling” calls throughout the weekend from upset Erlanger employees and retirees, who have had their health and retirement benefits slashed this year amidst cost-saving efforts and who were frustrated by the bonuses.