Coakley gives approval to Caritas deal

By 
Gintautas Dumcius, News Editor
Oct. 6, 2010

Attorney General Martha Coakley has signed off on the proposal that will transfer six Catholic hospitals, including Dorchester’s Carney Hospital, to a for-profit New York firm. The deal, which still needs the approval of the state’s highest court and the state Department of Public Health, comes with a number of strings attached for Cerberus Capital Management L.P., whose affiliate, Steward Health Care System LLC, is handling the agreement.

Under the agreement, released late yesterday morning, the six hospitals now owned by Caritas Christi Health Care cannot be transferred to another entity for three years. Also, the period prohibiting the closure of any of the hospitals has been extended from three years to five years if certain financial performance measures are met. The deal, which proponents say provides an influx of $400 million in desperately needed capital improvements to the facilities, also provides for a $1.5 million assessment conducted by DPH and Coakley’s office over five years that will be aimed at monitoring the impact of the deal. The firm is also prevented from reducing the number of in-patient psychiatric and detoxification beds.

Coakley, whose office had oversight over the proposed purchase because it is a nonprofit entity turning into a for-profit one, said the agreement preserves the jobs of the 12,000 Caritas employees and the pensions of 13,000 current and former Caritas employees. It also creates 4,000 new construction jobs, supporters say.

The review lasted five months, and included meetings over the summer in each of the communities that has a hospital. The deal drew supportive comments from Mayor Thomas Menino and other local elected officials.

“After considerable negotiations with our office, we have ensured further protections to prevent Steward from closing or transferring these hospitals and extended the state’s ability to monitor Steward to five years,” Coakley said in a statement. “This will preserve access to health care for the residents who use these hospitals for important care and services.”

Coakley, in her office’s 64-page review, said it was “impracticable, if not impossible” for Caritas to continue in its current iteration. Caritas officials have said that Carney and St. Elizabeth’s in Brighton would be in particular danger of closing if the deal doesn’t go through and Coakley’s office, in its assessment, said if Caritas were to continue to operate as a public charity, it would leave the pensions of some 13,000 current and former employees substantially underfunded, uninsured, and at risk.
Coakley, in an interview on WGBH radio yesterday morning, acknowledged that the state was entering into “uncharted territory” with the deal.

“While there are risks to the public intrinsic in any change of control, including a non-profit to for-profit conversion, those risks are outweighed by the previously described risks of not undertaking the transaction,” the report said. “Moreover, and with the additional protections and transparency obtained by the Attorney General, the benefits of maintaining the system as a system, avoiding Caritas Hospital closures, funding the pension liabilities, satisfying the debt, and beginning the process of addressing the deferred capital needs of Caritas are clear and compelling.”

The agreement mandates that Steward maintain “community benefit” expenditures, a cost of $26 million every year. The deal also seeks to preserve the “Catholic identity” of the hospitals, though it keeps in a provision that drew criticism from some Catholic groups: If Steward finds that observing the “Catholic identity” becomes “materially burdensome,” it can opt out of provision for $25 million, which would be donated to a public charity designated by the Archdiocese of Boston.

The other hospitals include Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen, Norwood Hospital in Norwood, and St. Anne’s Hospital in Fall River.

Veronica Turner, the executive vice president of the 1199 SEIU health care union, said in a statement the deal included “important assurances for both workers and patients.” The union has 3,000 members working at four Caritas hospitals, including the Carney.

“The healthcare workers of Caritas applaud the attorney general for assenting to the continuation of the approval process,” stated Turner.  “This is an important step towards ensuring the high quality and affordable care we deliver at Caritas remains accessible and available over the long-term to the many patients and families who depend on the services of our hospitals.” 

Text of Coakley’s report can be found at mass.gov/ago/caritas.