Ascension Healths possible arrival in Massachusetts may have won the blessing of Bostons archbishop, but it raised questions elsewhere about the giant hospital operators potential ownership of a major healthcare provider in the city.
Ascension, the nations largest Catholic health system, announced last week a nonbinding letter of intent to acquire Caritas Christi Health Care, a six-hospital system owned by the Archdiocese of Boston.
Boston Mayor Thomas Menino reacted uneasily to the deal. Menino said in a written statement that he feared 65-hospital Ascensions acquisition would curb services or cut employment at two Caritas hospitals: 231-bed St. Elizabeths Medical Center in Brighton, Mass., and 186-bed Carney Hospital in Dorchester, Mass.
Both hospitals have hurt Caritas financially. Heavy losses at Carney Hospital and the Caritas Medical Group, a physician practice based at St. Elizabeths, eroded Caritas Christis profits earlier in the decade, according to Moodys Investors Service reports.
I am concerned that while the archdiocese begins these delicate negotiations about the future of its Boston hospitals, too much focus will be on the bottom line, Menino said. We cannot afford to lose these valuable services and jobs. It is my hope that both parties will agree and that this business transaction will not interfere with the good work that these two hospitals provide to our residents.
Terrence Donilon, the Boston Archdioceses spokesman, did not return calls seeking comment.
John McDonough, executive director of the Massachusetts health advocacy not-for-profit Health Care for All, said it is too early to say how Ascensions acquisition will affect Caritas Christis aid to communities and low-income patients, services or local accountability. I think there are more questions than conclusions, he said. In announcing the deal, the prospective partners pledged to keep local hospital boards in place but offered few other details. In a joint statement, Ascension and archdiocese officials said they hoped to move quickly and close the deal in July.
Church leaders described the deal as a bid to strengthen Catholic healthcare. Cardinal Sean Patrick OMalley, Bostons archbishop, said in a written statement: We have selected a potential sponsor and health system that has both the values consistent with those of the Archdiocese of Boston and Caritas Christi and the financial strength to support our healthcare system.
Ascensions more than $11 billion in annual revenue dwarfs Caritas Christis yearly operations, which totaled $1.17 billion for the year ended in Sept. 30, 2005, the most recent publicly available figures. But more significantly, Ascensions margins have steadily improved since the giant hospital operator formed in 1999. Meanwhile, Caritas Christi posted its first operating profit in seven years in 2005, Moodys said. The system owes its rebound, in part, to hefty state-tax subsidies for Carney Hospital, which received $4 million, $5.5 million and $5.4 million in 2007, 2006 and 2005, respectively, according to the Massachusetts Executive Office of Health and Human Services. The system had roughly $278 million in debt outstanding, Moodys said in March 2006.
Still, every Caritas hospital posted an operating profit in 2005 and continued that success as of Sept. 30, 2006, according to Massachusetts financial records. This is not a distressed property, said David Burik, a managing director with Navigant Consulting, which was hired by Bostons archdiocese as officials considered Caritas Christis future. If successful, the deal will mark Ascensions entry into Massachusetts healthcare market. The deal would improve Ascensions geographic diversity and give Ascension valuable experience with Massachusetts universal health insurance law, said Robert Henkel, Ascension Healths chief operating officer.