By Pete Stidman
News Editor

Attorney General Martha Coakley set off a whirlwind of criticism as well as some praise from Dorchester's healthcare community last week with her release of a report on Caritas Christi Healthcare.

There was universal support for a recommendation to reduce the Archdiocese of Boston's influence over business decisions - a change in governance that was already underway, according to Cardinal Seán O'Malley - as well as a proposal to create a productivity-based pay system in the Caritas Physician Network.

There was also widespread criticism - in Dorchester at least - of a recommendation that Caritas "consider" changing the Caritas Carney Hospital on Dorchester Avenue from an acute care hospital to one that focuses more on behavioral health, such as psychiatry and substance abuse treatment. This paralleled another suggestion to reduce services at Brighton's St. Elizabeth Hospital's tertiary care abilities to just two or three specialty areas.

Many healthcare professionals criticized the report as "market-based" while ignoring a needs-based look at what the Carney provides for residents of Dorchester, Mattapan and the region's healthcare system.

A defiant Daniel O'Leary, Carney president, vowed in an e-mail: "as long as I am president, Caritas Carney Hospital will continue to meet the needs of the community it serves, including providing inpatient acute care services."

"I was surprised by the focus on Caritas Carney," O'Leary said in a phone interview. "I didn't think they spent much time looking at this institution. They had a one-hour interview with me and took a one-hour tour. That was the extent of their involvement here as far as I'm aware."

Caritas Christi itself, according to chief operating officer Dick Cunningham, found no surprises in the report.

"The AG's report really validates a lot of the efforts that we already have underway in Caritas," he said. "One thing is for sure, Carney can't maintain the status quo. There has to be change. We have to find a balance of services at Carney to make it profitable, and any assistance the AG's office can offer will be well received."

Cunningham added that the archdiocese and Caritas are committed to maintaining services in Dorchester, but didn't specify what type.

An internal letter from Cardinal O'Malley and chairman of the board of governors James Karam sent the same day as the AG's report, assured the "Caritas Christi Community" that a new system of governance was being implemented. Two high-ranking archdiocese officials stepped down from the board of governors, which oversees the hospital chain, and Rev. Brian Hehir joined the board as the church's representative. Under the new model, read the letter, the archdiocese's powers over Caritas would be limited to ethical and religious directives and any transaction that would involve the sale of the system. According to Cunningham, more governance changes involving the board of trustees at each hospital are yet to come.

The AG's report had cited archdiocese overreach as a disincentive to potential CEO candidates and board members. The chain's first choice for the now-vacant CEO position, Dr. Christopher T. Olivia, turned down the job in January to take another offer in Pittsburgh. Olivia told the Boston Globe the decision came down to flipping a coin.

Cunningham said a new round of CEO interviews is nearly complete, and the board of governors will soon begin narrowing down their list.

Outside of Caritas Christi, a growing choir is raising voices in support of keeping the community hospital open as an acute care facility. A new baritone ringing out is Dr. Alan Sager, a professor of health policy and management at Boston University. Sager has been observing the successes and failures of hospitals for 30 years, conducting a study that compares the life spans of 1200 hospitals in 52 cities since the 1930s.

Sager wrote off the Carney section of the report as "incomplete" and its proposals as "misguided and erroneous."

"The PowerPoint slides seem to argue that if the Carney isn't making money, it doesn't deserve to survive as an acute care hospital," Sager said. "Survival is a very complicated thing if we don't even have a functioning free market for hospital care, and there's not, not in Boston, not in Massachusetts, or not anywhere else in the U.S."

According to Sager, a free market would include enough small competitors to prevent any one of them from setting prices; customers that freely chose between hospitals&emdash;perhaps based on prices or quality; and easy entry into the market for new competitors, to name a few. But because huge systems like Partners Healthcare can effectively influence higher reimbursement rates from insurance companies, because healthcare consumers do not price shop or even make choices between hospitals, and because it is prohibitively expensive to enter into the healthcare field, there is no free market, he said.

This point echoes many made by Dorchester's community health center leaders, such as Bill Walczak, Daniel Driscoll and Marva Serotkin. The three have begun meeting with others to strategize on the Carney's behalf. Driscoll dispatched an e-mail to the community and media on Monday, praising the AG's suggestions on governance and on creating a productivity-based pay scale for the Caritas Physician Group - which has been a drain on Caritas Christi and Carney finances - but strongly disagreeing with the assessment of the Carney. In particular, Driscoll takes exception to an unsubstantiated claim in the report that other nearby hospitals could absorb Dorchester's need for medical-surgical beds.

"If Carney were to close, the other hospitals could probably pick up the load, but the cost would be up to three times as much as that," Driscoll said in a phone interview. "It doesn't make any sense at all."

In the e-mail, he cites state Division of Health Care Finance and Policy data from 2005 that shows the total cost of a discharged patient with chest pain averaged $4,803 at the Carney, but jumped to $7,445 at the Boston Medical Center and $12,816 at Brigham and Women's Hospital. The cost differences are often due to a greater depth of services at larger teaching hospitals&emdash;maintaining high-end tertiary and quaternary services can often increase the bottom line on everything from flu-shots to broken arms.

Higher costs for services, argue Sager and others, could add to the overall cost of the Commonwealth's healthcare reform package.

Asked about the study's market driven focus and if Carney's low-cost services were considered by the consulting team, Coakley pointed to survival as a test of costs.

"For some individual [services] the cost is low, but the hospital is then close to failure," said Coakley in a phone interview. "The Carney has been subsidized by other sources of income. That is a fact of life. That was an appropriate way to look at it. In the long run, if Carney can't raise revenues on its own, the archdiocese won't be able to save it and it will fail… It does not serve anybody's interest to keep it on life support."

Carney does fit the profile of dozens of other hospitals he has known to close over the past 80 years, Sager said, but slim finances are only part of the picture. "Large teaching hospitals tend to survive," he said. "Hospitals in black, African-American neighborhoods are more likely to close. Efficiency never predicts survivals."

His suggestion would be to bring in the Department of Public Health to analyze whether the hospital is needed. Formerly a trustee of the Waltham Hospital, he saw the DPH do so when that hospital first faced closure in 2002, but the needs assessment came too late, he said. During that hearing, then Waltham Mayor David Gately spoke out against closure, "If this hospital closes, lives will be lost, emergency care will be too many miles and too many minutes away," he was quoted as saying in the Boston Globe.

At the time, articles in a number of publications enumerated a long history of hospital closings in Massachusetts, and a resultant shortage of beds in acute care hospitals.

"There is little doubt that Carney faces challenges," Council President Maureen Feeney wrote in a prepared statement, echoing Gately's concerns and also calling for a needs assessment. "I recognize that continuing to operate as is and under the current structure is not a viable option. However, I am unconvinced that future of the Carney does not include acute care. It is clear to me and our elected leadership that this community needs the services that Carney provides."

Read Attorney General Coakley's letter summarizing the report's findings. PDF 334kb

Read the full "progress report" issued today by the Attorney General. PDF 156 kb