The 124-bed Merrimack Valley Hospital in Haverhill and 57-bed Nashoba Valley Medical Center in Ayer — both owned by Essent Healthcare of Nashville — will be sold to Steward for a price the parties, both private businesses, aren’t disclosing.
The Boston Globe reports that a state judge has blessed the sale of Caritas Christi hospitals to the New York equity firm, Cerberus Capital Management, meaning that the takeover is virtually guaranteed.
Under the judgment from Associate Justice Francis X. Spina, the Boston-based Caritas chain of six Catholic hospitals across eastern Massachusetts will be allowed to convert from a nonprofit organization to an investor-run business owned by New York private equity firm Cerberus Capital Management.
The report says that Caritas, which operates the state’s second largest hospital system, and Cerberus, must still “close on the deal” before it takes effect.
WBUR’s Martha Bebinger offers her analysis and speculation on possible manuevering in the marketplace if the Caritas Christi hospitals deal is ultimately approved:
If the sale of Caritas Christi’s six hospitals to a private equity firm goes through it will trigger major changes in the hospital marketplace in Massachusetts as we’ve reported here. Paul Levy at Beth Israel Deaconess Medical Center (and other hospital executives who will be affected) are scrutinizing quotes as they speculate about possible changes. Levy wonders, for example, if there are signs that Caritas might seek an affiliation with Partners, the state’s largest hospital network and if Partners is signaling interest.
Caritas’ CEO Ralph de la Torre says the Accountable Care Organization (ACO) he plans to create will need to refer some patients to one of Boston’s tertiary hospitals. A few hospital administrators say de la Torre could press to add the brand name Partners’ hospitals to his ACO and that Partners could be tempted to negotiate deep discounts for Caritas.
As Levy points out, an affiliation between the state’s two largest hospital networks would take dominance to a new level; which is why some hospital consultants say it could not happen. The state Attorney General’s office has told Partners that any new affiliations would receive more than the usual scrutiny (notice the standoff approach to overtures from Cambridge Health Alliance). And Partners has to be rattled by the federal lawsuit filed Monday in Michigan.
The Caritas/tertiary affiliation decision, whenever it happens, will say a lot about the network’s priorities: will it go with the best value or the best brand.
Some Caritas supporters are frustrated by warnings that, if the sale goes through, the network will use Cerberus’ cash to prey on competing hospitals and physician groups. They point out that Partners or Beth Israel or both already have physician practices in the Caritas hospital communities and this deal would just give Caritas a chance to compete.
A coalition of community hospitals and a few Catholic groups continue to question (PDF) the merits of the Caritas-Cerberus deal, but it is expected to win approval from the Supreme Judicial Court in the coming weeks.
Here’s the WBUR story:
Mass. AG Backs Caritas Sale Under Conditions
By WBUR NEWS & WIRE SERVICES
BOSTON — Massachusetts Attorney General Martha Coakley says she’ll back the sale of the nonprofit Caritas Christi Health Care System to a private equity firm under conditions that protect the quality of care, and maintain jobs.
Coakley announced Wednesday that after a five-month investigation of the sale of the six hospitals to New York-based Cerberus Capital Management the restructured deal complies with state law.
The attorney general’s approval was needed because Cerberus wants to make the hospitals for profit.
Coakley says new provisions in the agreement bar Cerberus Capital Management from selling or closing any of the hospitals for three years and the deal will help all six hospitals, which have been struggling to stay open.
“This resolves that issue for them and I think will help strengthen health care in general in Massachusetts,” Coakley says.
Various state agencies will have to decide whether to approve the deal. Continue reading
The Boston Globe headline reads: “Hospitals Spent to Keep Talent.”
An alternative headline might be: Top Boston hospital executives earn large salaries. Or at least, they did in 2008, before the economic crisis hit full blast. It would be interesting to read what their pay is like in these days of layoffs and cutbacks. Any volunteers?
Newly required public filings obtained by the Globe include these 2008 pay packages:
Elaine S. Ullian, now retired as Boston Medical Center’s chief executive: nearly $4.8 million, including $3.5 million in deferred compensation
James J. Mongan, former Partners chief executive: $3.6 million in total compensation.
Gary L. Gottlieb, president of the Partners-owned Brigham and Women’s Hospital: $1.6 million total package.
Peter L. Slavin, then president of Partners’ Massachusetts General Hospital: $1.4 million total.
Paul F. Levy, chief executive of Harvard-affiliated Beth Israel Deaconess Medical Center: nearly $1.3 million.
Ellen M. Zane, chief executive at Tufts Medical Center: about $1.2 million.
Ralph de la Torre, chief executive of the Catholic hospital chain Caritas Christi Health Care: $1.2 million in total in 2008.