Issue link: https://beckershealthcare.uberflip.com/i/790284
45 CFO / FINANCE Erlanger Misses Budget Targets Due to Higher Labor, Supply Costs By Ayla Ellison C hattanooga, Tenn.-based Erlanger Health System's second-quarter earnings fell below budget projec- tions, according to the Times Free Press. On Jan. 23, Erlanger CFO Britt Tabor told the system's board of trustees Erlanger ended the second quarter with operating income of $1.04 million, which fell significantly below the sys- tem's budget target of $3.04 million, according to the report. Mr. Tabor told the board there were various factors that caused the system to miss its budget targets, including high- er-than-expected overtime pay. The higher overtime expens- es were largely due to the opening of the new Erlanger East Hospital Nov. 30 and high patient census during the holiday period. A minimal amount of overtime expenses were due to Erlanger's Epic implementation. Mr. Tabor said employees had to be shifted to work on the Epic project, which required the system to hire replacements, according to the report. However, according to Erlanger, the Epic overtime did not cause any material variance in the system's finances in the second quarter. Erlanger also spent more than expected in the second quar- ter on pharmaceutical drugs and employee health insur- ance benefits. The system ended the quarter with a net loss of $1.66 mil- lion, falling short of its budgeted net income of $487,000. Erlanger President and CEO Kevin Spiegel said he was pleased with the system's second-quarter results on Jan. 23, noting ad- missions and net patient revenue were up compared to the same period of the year prior, according to the report. n CHS Shareholders Seek to Limit Executive Windfalls if Company is Sold By Ayla Ellison S hareholders of Franklin, Tenn.-based Community Health Systems have proposed a measure that aims to ban accelerated vesting of unearned equity awards for execu- tives if there is a change in control of the company. Equity-based awards help align executive pay with perfor- mance, as there are performance-based measures attached to the awards. This helps ensure executives are compensated for results that drive long-term shareholder value. In the event of a merger, acquisition or other change in control, the acceleration of unvested awards is meant to protect and compensate executives. However, some view the automatic, full acceleration of unearned equity as an executive windfall. The pending CHS shareholder proposal looks to ban ac- celerated vesting of all executive equity awards. The mea- sure is expected to go to a vote at CHS' annual shareholder meeting this year, according to a press release from National Nurses United. National Nurses United strongly supports the shareholder proposal. "An entrenched management that stands to receive lucrative golden parachutes and continues with poor corpo- rate governance is not in the best interest of the patients or communities that CHS hospitals serve," said Brenda Mead- well, an RN at CHS' Bluefield (W.Va.) Regional Medical Center. A CHS spokeswoman told Becker's the company will address the shareholder proposal in its proxy statement, as address- ing the proposal in advance is a possible violation of proxy solicitation rules. n 20 States With the Highest Medicare Waste By Ayla Ellison T he District of Columbia had the high- est amount of Medicare waste per ben- eficiary in fiscal year 2015, according to a recently released analysis by the Council for Medicare Integrity, a nonprofit govern- ment watchdog. For the analysis, CMI looked at the amount of Medicare overpayments collected from healthcare providers through the Recovery Audit Contractor program in each state and the District of Columbia in FY 2015. CMI then divided the overpayment amounts by the number of Medicare beneficiaries in each state to determine the amount of taxpayer dollars wasted per beneficiary. Here are the 20 states with the highest Medi- care waste per beneficiary, according to the CMI report. 1. District of Columbia — $30.90 waste per beneficiary 2. Delaware — $22.55 3. Texas — $20.62 4. New Jersey — $18.09 5. Oklahoma — $17.80 6. Connecticut — $17.17 7. Louisiana — $15.41 8. Pennsylvania — $14.73 9. California — $14.72 10. Arkansas — $14.21 11. New Mexico — 14.13 12. Arizona — $13.60 13. Missouri — $12.71 14. Colorado — $12.63 15. Wyoming — $11.78 16. Hawaii — $11.31 17. Mississippi — $11.05 18. West Virginia — $10.63 19. Indiana — $10.38 20. Nevada — $9.69 n