I wrote below about the difficult policy issues faced by the Attorney general in the review of the proposed acquisition of the Caritas Christi hospital system by the Cerberus private equity firm, giving a more detailed example of one such issue here. In today's Boston Globe, Rob Weisman writes of a letter sent by several labor leaders to the Attorney General, refuting the points raised by several competing hospitals that wish to impose restrictions on the transaction. You can read the letter here.
Are the points raised by the other hospitals "simply [to] slow down any merger as a way to preserve their market share and to disadvantage Caritas," as asserted by the union leaders? Or, do the hospitals' arguments raise legitimate public interest concerns?
It is great to see the matter debated openly and completely, and the Globe provides an important public service when it posts the letter itself in addition to writing a summary story. Given the unprecedented scale of this proposed ownership shift, we are sure to see lots more give and take over the coming months.
Even disregarding the unions' habit of constantly impugning the motives of others, including those of Paul Levy, they should be careful with whom they are climbing into bed. I seriously doubt that the welfare of labor is high on Cerberus' priority list, and one of the primary tools for improving financial efficiency is - layoffs.
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Paul-From those of us interested, but non-local followers, thanks for your coverage and insights into this proposed transaction!
ReplyDeleteThe SEIU is playing both ends against the middle here. First, they are investors in Cerberus, as well as the representative union for the Caritas employees. Think they have enough reasons to favor the deal?
ReplyDeleteSecond, they weren't always so enamored of Cerberus. Consider remarks on their website www.behindthebuyouts.org:
" Cerberus-owned IAP Worldwide Services was responsible for operation and administrative support at the Walter Reed Medical Center during the scandal involving substandard treatment of veterans. IAP’s arrival at Walter Reed in January 2006 (after winning a five-year $120 million contract) was accompanied by a reduction in medical and support staff at the facility, implicating the firm in the scandal at the military hospital.
Last week, SEIU released a set of principles designed to address the concerns of investors, the public, and workers including:
* The buyout industry should play by the same set of rules as everyone else, including providing transparency and disclosure about their businesses, supporting equitable tax rates, and eliminating conflicts of interest and other potential abuses in their transactions;
* Community stakeholders , including consumer organizations and the public, should have a voice in the deals and benefit from their outcome."
I think the unions are acutely aware of the fact that if Cerberus doesn't infuse Caritas with much needed capital then the layoffs and cuts will be even more drastic compared to what might happen down the road under Cerberus. That is why the attorney general will approve this transaction as Caritas will say without the deal they will be looking at huge cuts to keep Caritas going and no politician is going to block a deal that will save jobs in this type of hostile business environment. Now that the attorney general has a challenger in the upcoming election, I would guess she will sign off on this deal in the next few weeks to firm up her union support ahead of the November vote.
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