The new chief executive officer of Caritas Christi Health Care in Boston is still using his skills as a physician, but instead of rehabilitating a patient, he's trying to heal a health system.
Six-hospital Caritas has lost almost $50 million since 2000 and faces a series of operational obstacles that have put it "on the threshold of crisis," according to a report prepared by the recently departed interim CEO and obtained last week by Modern Healthcare.
"Much like a patient that has been struggling to maintain homeostasis, the system has expended great energy and cash just to approach solvency," said a draft of the 16-page performance report dated May 13 and addressed to the Archdiocese of Boston, which sponsors Caritas. "Like that patient, should a crisis occur, reserves have been largely spent." Only a significant change in leadership behavior, the report said, can transform the system from "imminent threat to stability."
The performance report-circulated to the Boston Archdiocese, the system's board of governors and Caritas executives-was written by Emmett Murphy, the management consultant who left earlier this month amid questions over his qualifications. Murphy served as interim chief after the abrupt departure of 10-year CEO Michael Collins in April (May 17, p. 36). Officials said the questions raised about Murphy had nothing to do with his planned departure.
Robert Haddad, the physician who was appointed Caritas' CEO May 12, said that the system is not in a state of crisis. "I believe the system is very stable as it relates to its mission and its culture," Haddad said last week. "I do think we can certainly improve our performance and do better." Haddad said Murphy's report fits into a broad, ongoing assessment of the system and its future.
The report cites problems throughout business operations at Caritas, from excessively high labor costs to conflicts between the board of governors and the Boston Archdiocese as to which has ultimate authority over the system. The report also argues that Caritas leaders have not emphasized sharing clinical knowledge, measuring best practices or functioning as a truly integrated delivery network.
"We can do a much better job in our organization talking about how we manage outcomes, emphasize quality, bring value to the marketplace ... and how we take advantage of emerging technology to better integrate in a more formal and disciplined fashion," said Haddad, who was president of 250-bed Caritas St. Elizabeth's Medical Center, located just outside of Boston, before taking the reins of the system.
Haddad first reviewed the report less than a day before talking to Modern Healthcare last week. As a result, he said, he preferred to decline comment on many of its specifics.
When factors such as unfunded retirement liability and a nurse union settlement were accounted for, Caritas posted "real operating losses" of $99.6 million from September 2000 to February 2004, according to Murphy's report.
Caritas officials said they were reviewing the report's figures but said it is not common to include retirement liabilities and similar factors in operational results. From fiscal 2000 to 2003, the system posted a $27.3 million net loss and a $49.5 million operational loss on total revenue of $3.6 billion, which is "in line with or better than the Massachusetts environment as a whole," a Caritas spokesman said. Caritas posted annual net losses from 2000 to 2002 but showed net income of $1.6 million on revenue of $1.1 billion in 2003. System officials expect to break even for 2004.
"My reading of the report was that over the (four-year) term there was a significant amount of losses, but if you place that in relation to hospital systems of the same size, Caritas Christi is not doing that poorly," said the Rev. Christopher Coyne, a Boston Archdiocese spokesman. Haddad, Coyne said, "is fully aware of the challenges that Caritas must respond to."