Erlanger misses budget targets due to higher labor, supply costs

Chattanooga, Tenn.-based Erlanger Health System's second-quarter earnings fell below budget projections, according to the Times Free Press.

On Monday, 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 system'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 higher-than-expected overtime pay. The higher overtime expenses 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 quarter on pharmaceutical drugs and employee health insurance benefits.

The system ended the quarter with a net loss of $1.66 million, 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 Monday, noting admissions and net patient revenue were up compared to the same period of the year prior, according to the report.

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Editor's note: This story was updated Jan. 25 to reflect the opening of Erlanger East Hospital and high patient census during the holidays were the main drivers of Erlanger's overtime expenses in the second quarter. 

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