Roy Exum: Erlanger’s New Direction

Sunday, October 27, 2013 - by Roy Exum
Roy Exum
Roy Exum

When my right elbow was finally removed, the best we can tell is that my arm shortened by about four inches and is largely ornamental. That means I don’t have to apologize any longer for the fact I can’t get my arms around the myriad of problems that have beset “my” Erlanger Hospital. Our grand Baroness is in such dire straits it can be likened to being just one foot away from hell but I need to convince you it is going in the other direction.

One day last week I spent an intense hour behind closed doors as CEO Kevin Spiegel and Chief Financial Officer Britt Tabor used charts and honest answers to explain why we are in an awful rut. I now know what “Certified Public Expenditures” mean and how “CPE mechanics” work. I can see what stupid and inept leadership has now cost us and how it is going to take a mammoth push by our state legislators, our local leaders and our own citizens to bring our greatest asset back to health.

Erlanger lost $17 million in the last fiscal year and $17 million the year before. It can be argued that if previous hospital administrations had been diligent this mess might not have occurred but slinging rotten tomatoes after the fact will just raise another stink so let’s focus on what must be done in a real big hurry. We must fix our hospital.

My passion for the place and its people began when I was still wearing short pants and I would listen to my grandfather fret; he was the Chairman of the Board for 38 years and was never paid a dime. He did it because he worried about people in our city. When he foresaw that one day a working man wouldn’t be able to handle health costs, he went to Cuba with a wad of his own cash and bought the charter for Blue Cross-Blue Shield of Tennessee.

The late Roy McDonald – yes, I was named for him -- was then Chairman of the Board for Blue Cross-Blue Shield’s first 42 years in Tennessee and that’s why his name is on the big building atop Cameron Hill. I can remember Erlanger and Blue Cross-Blue Shield had a grand relationship when he was over both. Are you kidding? And now you know why “The Blue” is proudly headquartered in Chattanooga instead of some dumpy city.

As the two intensely bright guys, Kevin and Britt, outlined critical financial areas, I found myself thinking what the late “Mr. Roy” would have done and I believe he would roundly applaud the steps the new administrators are taking to cut costs, claim federal and state funding that Erlanger is entitled, and convince our county and city leaders that they have a moral responsibility to the citizens of Hamilton County and Chattanooga.

The biggest reason I met with Kevin and Britt was my alarm that the employees were being mistreated. The strength of any army is its foot soldiers and I am convinced Erlanger’s attention to its rank-and-file has been notably lacking in recent years. But the trouble and the truth is that Erlanger has no money. Look at admissions, in-patient numbers, surgeries performed and $85 million in uncompensated care – that’s right, $85 million per year – and the doctors still wonder why it is hard to swallow?

So as the belt-tightening begins and the search for any fat is intensified, the first thing that auditors notice is Erlanger’s employee benefits are pretty rich when compared to other hospitals in the region. In order to protect jobs, the Board of Trustees has approved a necessary-but-fair plan that not one employee will like but must also appreciate. Key point: both Kevin and Britt showed me how no employee will lose any money that they have saved. (We’ll come back to this in a month or two but right now it is the thing to do, as bitter as that tonic may indeed taste.)

In the state of Tennessee as well as the country, there is a huge furor over health care. So when it was discovered there is a state Public Hospital Supplemental Payment Pool that has paid out $70 million a year to select public hospitals, Erlanger should have obviously been on the list. Why Erlanger was omitted no one knows. It should be an easy fix.

Except now none of those in Nashville are very interested, at least not until the Medicaid mess is settled. They tell Erlanger’s beggars not to “rock the boat" but fail to realize we can’t wait. My gracious, if Erlanger had been getting just its fair share in recent years (about $30 million annually once the fund is adjusted) can you see what that would mean? This isn’t unreasonable, right now it is crucial.

But that’s not the worst. Federal Medicaid is paid to public hospitals through a process called Certified Public Expenditures. The way it works is if Erlanger spends $100 in a Medicaid cost, the bill is sent to the state and then the federal government refunds the state $66, which is supposed to be sent back to the hospital.  The hospital bears the $34 difference.

But Tennessee is one of three states where this doesn’t work. Instead every penny of the refund is put in the state’s General Fund rather than given to the public hospital. Since Erlanger doesn’t get the federal money, it is forced to absorb 100 percent of the yearly $85 million in indigent care. I can hardly wait to hear someone from the governor’s office explain the reasoning or the fairness of that. Federal law surely prohibits such.

A great “what if” question can be made when you wonder what Erlanger could do with 66 percent of $85 million every year. The hope is that Gerald McCormick and our other state legislators can open the state’s eyes that such malarkey is about to kill our public hospital. Add your Medicaid money to what Chattanooga’s Level 1 Trauma Center should have gotten from the Public Hospital Supplemental Payment Pool and you can readily see where quick help could come from.

Then there is our local government – the county and the city. In Memphis the large public hospital, called “The Med,” receives $64.2 million annually from Shelby County. In Nashville the large public hospital, “Metro General,” receives $32.7 million annually from Davidson County. In Atlanta the large public hospital “Grady” receives $64.2 million annually from Dekalb and Fulton counties.

But Hamilton County has indicated they intend to give Erlanger less than a paltry $1.5 million annually as the hospital pursues a modern and vital 501c3 form of operating procedure. The city of Chattanooga, the hospital’s largest user, flatly refuses to give the hospital any money at all. That said, Erlanger is the only hospital in the region that does not turn away any patient from Hamilton County or the city of Chattanooga who requires immediate or critical care. How do you like them apples?

So, yes, Erlanger is in trouble. The hospital’s operating expenses are $552 million and until revenue sources can be implemented, the hospital’s 4,500-plus employees will be forced to endure benefit cuts and other measures that successful and viable companies do when they wind up one foot from hell and need to move – very quickly -- in the other direction.

Each of us ought to help Erlanger in any way we can.

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