Erlanger increasing executives’ salaries 3.5 percent to 36.5 percent

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Chattanooga Times and Free Press (Tennessee)

Erlanger hospital Chief Executive Officer Jim Brexler gave salary increases ranging from $5,425 to $65,673 a year to 10 executives based on recommendations from a consulting firm hired to assess the hospital’s compensation structure for top administrators.

The pay raises reflect added job responsibilities for most of these executives, said Gregg Gentry, senior vice president for human resources.

“For all practical purposes, they’re different jobs,” he said.

The pay boosts ranged from 3.5 percent to 36.5 percent, figures show.

Mr. Brexler’s $360,009 annual salary did not increase.

Clark Consulting Healthcare Group, based in Minneapolis, recommended the hospital boost executive salaries to keep them comparable to those offered at peer institutions.

“Erlanger engaged us to ensure that, in fact, they are competitive,” said Jay Justice, senior vice president for Clark Consulting.

Mr. Brexler said he understands if an executive leaves for a promotion and career advancement. But, he said, “I don’t want them to leave simply over salary.”

Jerry Flanagan, health care policy director for the Santa Monica, Calif.-based Foundation for Taxpayer and Consumer Rights, said hospitals are in an “arms race” as they keep increasing salaries to stay competitive. And this is money that could be spent on patient care, he said. “When we spend more on salaries, patients are in effect spending more of their dollar for overhead,” he said.

But Craig Becker, president of the Tennessee Hospital Association, said executive salaries are not the factor causing health care costs to skyrocket. And he said attention is paid to make sure hospital executive salaries are “not out of line.”

Mr. Brexler said there are some “extreme examples” of exorbitant salaries in the health care industry, but Erlanger’s pay levels are appropriate and crucial in keeping qualified executives at the hospital.

“If we undercompensate, we’re not going to retain top talent,” Mr. Brexler said.

Mr. Gentry said Erlanger also has increased salaries of other employees. Last summer, about 4,200 employees “across the board” received pay increases of at least 3.5 percent.

Erlanger also implements market rate adjustments to keep salaries in line with peer hospitals, he said. For example, about 1,300 workers, including registered nurses and licensed practical nurses, recently received a minimum of a 3 percent market adjustment, with the average increase ranging from 4.5 percent to 5 percent, Mr. Gentry said.

Clark Consulting’s salary study included data from several sources, including its own database of about 400 health care systems and 1,100 hospitals, Mercer Human Resource Consulting, Sullivan Cotter and Associates Inc. and Watson Wyatt Data Services. The firm developed salary ranges for each executive-level job with a 50 percent spread from minimum to maximum amounts, with a midpoint figure also provided.

For example, the salary range for Chief Financial Officer Britt Tabor is $225,600 to $338,400, with a $282,000 midpoint. With the recent pay adjustment, he’s now making the range minimum of $225,600.

The salary of Chief Operating Officer Charlesetta Woodard-Thompson now is at the $315,000 range midpoint given in the Clark Consulting analysis. Susan O’Hare, senior vice president for specialty hospitals, now is being paid $183,750, slightly higher than the $175,000 midpoint.

The ranges are intended to give the hospital the ability to fix salaries based on factors such as performance, experience and tenure, according to the Clark Consulting analysis.

Before the pay adjustments, five Erlanger executives made less than the range minimum and no one was paid above the range maximum, according to the analysis.

Mr. Gentry, senior vice president for human resources, said of the 10 executives receiving raises, only two — Chief Compliance Officer Alana Sullivan and Senior Vice President for Strategic Planning Joe Winick — did not take on added responsibilities or basically assume a new job.

Some of Erlanger’s regional peers noted in the Clark survey are Methodist Healthcare of Memphis, Mountain States Health Alliance of Johnson City, Tenn., and Columbus Regional Healthcare System of Columbus, Ga.

Locally, Memorial Hospital Chief Executive Officer Ruth Brinkley made $415,414 in the 2005 fiscal year, the most recent year data is available.

Deb Moore, vice president of operations and Memorial North Park administrator, made $171,443, according to figures provided by Memorial.

Lynn Whisman, chief nurse executive and vice president of clinical operations, made $251,763 while Chief Financial Officer Carol Newton made $264,901 in the 2005 fiscal year. Gale Fellowes, M.D., chief medical officer, made $70,681 that fiscal year, according to Memorial.

“Catholic Health Initiatives and Memorial believe that strong and effective health care executives are valuable assets and that they should be appropriately compensated for excellent performance,” Memorial media relations coordinator Karen Sloan said in a statement.

Stephanie Austin, marketing director for Parkridge Medical Center, declined to provide executive salary information.

“In order to attract the best and brightest talent, TriStar Health System works continuously to ensure our employee compensation is competitive,” she said in a statement. “However, we do not publicly disclose our salaries, wages and benefits.”

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