The pending sale of Caritas Christi was in the news a fair amount during the past week or so as a result of threats to shut down two of their hospitals if the sale to Cerberus does not go through. Opposition to the sale from community organizations and blogs is increasing, and we see evidence that is starting to bother some people in high places. We have been asked by a number of readers to recap what has happened recently, so here are three things we are being asked which we think everyone should be asking about deal.
- Is Caritas management being two-faced?
- Is the threat to close 2 hospitals genuine?
- What’s with all of the complaints about the deal piling up?
1. Is Caritas management being two-faced?
The Boston Globe reported last Friday, September 24 on Caritas’ negotiations with the nurses’ union, where Caritas said they would have to shut St. Elizabeth’s Hospital and Carney Hospital if the Cerberus deal does not go through. They also asked for concessions from the nurses union, including a wage freeze.
We are having trouble figuring out which version of the Caritas financial story is true. A year ago they announced they turned a $30 million profit and were on the rebound, then this spring they had to get acquired in order to survive, then around Labor Day they announced plans to acquire Landmark Hospital in Providence, and a few weeks later they need Cerberus in order to survive. Which is it? Who from the Archdiocese of Boston is involved in this? Here is what a Boston Globe reader commented on one of their latest OpEd pieces.
One week they are buying hospitals in RI (announced in the Globe on the Friday before the Labor Day weekend) 2 weeks later they are closing 2 hospitals because of “they can’t afford to keep them open unless the Cerberus deal is allowed to go through”. They have not released their business plan executive salaries, or how much other parties (e.g. Tufts Medical School) will get from this deal. They have lied constantly to the public and spread disinformation among employees. Is this the group that we want to give part of the states health care system to so they can cannibalize it for profit? If health care costs are really a problem why is the state even considering building a profit margin for Cerberus/Caritas into the system?
2. Is the threat to close 2 hospitals genuine?
It seems to us that the Caritas folks, and people like Jack Connors (Chair of Partners, which might want to pick up some Caritas hospitals in a couple of years) who endorsed the planned sale of Caritas as a “brilliant move,” initially thought a fast-track “yes” by the Attorney General was a fait accompli. Then people started complaining. Now that the review by the Attorney General seems to have slowed down—for good reason—it seems that the folks who want this to go through may be getting impatient and are trying to work the “Caritas chessboard” from both ends.
One end is the straight acquisition path we have seen already. But if Carney Hospital were to close–as has been discussed for years due to its financial condition and likely will be necessary in order for Cerberus to earn its profit down the road—why not avoid a public relations disaster and get the closing over quickly now? The same would hold for St. Elizabeths in Brighton. There is a nice plot of contiguous church-owned land, and this would be prime real estate for a lovely senior care or continuing care facility. If one or both hospitals were to close, all Partners need do is wait a respectable mourning period, and then buy St. E’s after the public outcry died down. This could be cheaper in the long-run and quicker too. The threat to close hospitals now puts pressure on the Attorney General from a different angle to approve the deal.
Call this speculation if you wish. But just look at the precedent set with Waltham Hospital back in 2003. After a couple of years of various financial moves to keep Waltham Hospital afloat, they had to shut the hospital. But, coincidentally, the final rescuer for Waltham Hospital at the point it closed was none other than Partners’ Newton-Wellesley Hospital.
Newton-Wellesley’s urgent care services are scheduled to begin July 29, 2003, the same day that Waltham Hospital is scheduled to close. Newton-Wellesley has also agreed to collaborate with Mr. MacDowell in exploring additional services they might provide in the future as part of a medical center redevelopment of the site.
Commenting on this agreement, Dawn Gideon, President & CEO of Waltham Hospital said, “We are thankful to Newton-Wellesley Hospital and Partners HealthCare network for their commitment to the Waltham community. Their presence at this site will ensure that patients’ urgent care needs will continue to be met in this community – right next door to their physicians’ offices at the Waltham Medical Building. We also appreciate the sincere efforts of Roy MacDowell for following through on his promise as the property’s owner to maintaining healthcare services at this property.”
Maybe we are just cynical here on this blog. But keep your eyes open for a pattern that might look something like a variation of the following: Sale to one group, then sale off. Maybe a sale to another group, then perhaps another sale off. In the middle, maybe the threat of closing if final sale doesn’t go through. Then close it. Shortly thereafter, Partners, who had never been in the picture, buys the hospital as a mere real estate parcel, and puts Children’s Hospital or Dana Farber remote locations there. So a general hospital serving a stable population for everything from broken bones to emergency room to chemotherapy goes down, and then from the ashes rises up a Partners specialty branch. Oh, by the way, did we mention how the Partners’ locations in the suburbs squeeze the local community hospitals because they get paid more for identical procedures by the insurance companies? See “Fueled by profits, a healthcare giant takes aim at suburbs: community hospitals running scared, and crying foul.”
3. What’s with the complaints about the deal piling up?
Legitimate complaints about the deal are piling up. Here is what a former MA Attorney General and trustee of Lawrence General Hospital said on September 28 in a Globe Op-Ed piece:
It will operate with a different set of incentives and it can use its access to capital to undercut its competition. For example, it can lure doctors with the most patients who have private insurance away from the competing hospitals to pump up revenues. It can engage in predatory pricing where it subsidizes prices, for a period of time, to gain a greater market share from the other hospitals. It can enter into exclusive agreements with health plans to squeeze out the competition. And since it has only made a commitment to hold the hospitals for three years these kinds of practices might pay off very quickly.
In this process the competing hospitals could be seriously harmed and forced to cut back drastically on the services they provide to their communities. If, after all of that, Cerberus’s investment in Caritas Christi were to end up like Chrysler, the effect on the health care available to people in the Lawrence, Brockton, and Fall River areas would be catastrophic.
The Coalition to Save Catholic Healthcare recently released the following complaint:
Attorney General Martha Coakley was accused of playing pressure politics to avoid the bad publicity attached to her conflict of interest with the CEO of the Caritas Christi Health Care System…Not only has Martha Coakley failed to respond to our letter 6 weeks ago asking that she recuse herself from any approval of a buyout of Caritas Christi by Cerberus Capital Management L.P.,” said Coalition Chairman R. T. Neary, “but she appears to be involved with the foot-dragging of the Massachusetts Ethics Commission, as well”.
Iin mid-September, a group of community hospitals, the Healthcare Access Coalition, went public asking for the state to impose strict rules on the sale including a commitment that Cerberus will not sell Caritas for seven years instead of three, as well as other restrictions they say are needed to keep them viable and ensure that low-income patients have access to health care services at reasonable prices.
What’s going on? It seems to us that people are tired of being bulldozed and are standing up to speak their mind. That is a good thing. For Catholics, the future of Catholic healthcare in Massachusetts is at stake. And for non-Catholics, the future of community-based healthcare for the poor, and even for the not-so-rich or not-so-well-insured is at stake. We feel the issues raised above and in our previous Caritas posts are very legitimate and should be fully explored in the light of day.