Erlanger Health distributes millions in bonuses after record-breaking year

In recognition of what Erlanger Health said was "it's best year ever," the five-hospital Tennessee healthcare system is distributing bonuses to every employee, according to the Daily Chattanoogan.

Altogether, the Chattanooga-based Erlanger will distribute management bonuses to 123 employees in senior management totaling $2.1 million. Chief Executive Officer Kevin Spiegel will receive the biggest payment, which is just under $245,000.

But Erlanger will also distribute another $1.32 million in bonuses to its non-management staff. Some 3,300 employees will receive $400 apiece, the Chattanooga Times Free Press reports.

"This is a way for management to acknowledge all of the employees--both full-time and part-time--that really added to Erlanger's to unprecedented success," Spiegel told the Times Free Press.

Erlanger had earned at least $37.3 million in fiscal 2015, according to the Times Free Press, triple the figure from the prior year and essentially erasing the net loss of $36 million between 2008 and 2013. Revenue also reached $669.8 million, up from $571.2 million in fiscal 2014. Nevertheless, the system still did not pay out the maximum amount of bonuses to its top management.

Citing data from the compensation benchmarking firm Sullivan Cotter, the Chattanoogan said the maximum bonus that could have been paid to top managers was $3.4 million. And while Erlanger reached all its financial goals, it fell short in meeting some of its quality goals. The bonuses are weighted 60 percent based on quality goals and 40 percent based on financial goals. The system is faced with spending $100 million to update its electronic medical records system, and recently received a $24 million line of credit with a local bank, the Chattanoogan reported.

Compensation for short-term performance within hospitals is slowly being replaced with a graduated payment system that takes long-term performance under consideration. Nevertheless, other providers, such as Parkland Hospital in Dallas, floated incentive payments of more than $5 million for this calendar year. 

If Erlanger pays out bonuses next year, it will be to a larger pool. Due to recent hiring, 152 managers will be eligible for bonuses in 2016, according to the Chattanoogan.

To learn more:
- read the Times Free Press article
- check out the Chattanoogan article

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