Caritas Christi Health Care, which runs six Catholic community hospitals in Massachusetts, making it the second-largest hospital group in the state, has agreed to be acquired by New York private equity firm Cerberus Capital Management. Hospital officials say that Cerberus--known as a "turnaround specialist" in financial circles--will help pull the system out of debt and make major improvements, reports the Boston Globe.
The $830 million deal, if approved by the state and the Catholic Archdiocese of Boston, will make history as the largest switch of hospital assets from nonprofit to for-profit status in Massachusetts, wrote Paul Levy, CEO of Boston's Beth Israel Deaconess Medical Center in his blog, Running a Hospital, this morning. It is the second major nonprofit to plan for a for-profit transition within a week, following Vanguard Health System's announcement that it plans to buy Detroit Medical Center.
All six Caritas hospitals will continue to be run by current management and follow the Catholic Church's ethical and religious directives, including a ban on abortion, as they become for-profit businesses and begin paying taxes to state and local governments. Cerberus, with no previous hospital acquisitions, has also stated it will keep all of the system's 12,000 employees, according to the Globe.
Caritas hospitals include its flagship St. Elizabeth's Medical Center in Brighton, Carney Hospital in Dorchester, Norwood Hospital, Good Samaritan Medical Center in Brockton, St. Anne's Hospital in Fall River, and Holy Family Hospital in Methuen. Most serve communities with large low-income populations.
Although Cerberus has agreed not to take the hospitals public or sell them for at least three years, the firm plans to expand its hospital holdings nationally and in Massachusetts, potentially helping Caritas compete with Boston's large academic medical centers.
"With the new financial resources being provided by Cerberus, Caritas has the potential to make investments in quality and safety that could help propel it to a leadership role in process improvement," Levy noted. "That's the kind of competition that Massachusetts needs."