Beth Kutscher at Modern Healthcare reports that for-profit hospital chains have done well and are poised for higher profits as a result of the Affordable Care Act, "because they've cut costs and adopted new initiatives to bring in more patients." Why is it then, that the largest for-profit system in Massachusetts has not been part of this trend? Indeed, it has had to close one of its hospitals for bad performance, "after the long-struggling hospital finally succumbed to the intense competition [from the non-profit hospitals] for patients south of Boston."
The firm has also resisted state requests for its most recent financial reports. Is that a sign that the numbers are so bad that the company doesn't want them to be disclosed publicly?
I recall an official from this firm commenting in 2011 about the virtues of private equity ownership compared to the management of non-profit hospitals:
At a recent conference, one private equity official derisively talked about the inadequacies of local lay leaders eating their "stale bologna sandwiches" at Board of Trustees meetings, to draw a contrast with the unsentimental businesslike behavior of a board chosen by his firm.
What's next? How will this pain end? How will essential hospital services be provided to host communities if the company is unable to meet financial targets? As I noted in 2011:
Those seeking to regulate the behavior and financial decisions of for-profit hospitals will find that their post hoc authority will likely be insufficient to protect the public interest . . . .
Investors may come and go, but the community depends on its local hospital to provide high quality service. It is the residents of the community who are left holding the bag if the hospital corporation reaches the conclusion that ownership is not financially viable.
The firm has also resisted state requests for its most recent financial reports. Is that a sign that the numbers are so bad that the company doesn't want them to be disclosed publicly?
I recall an official from this firm commenting in 2011 about the virtues of private equity ownership compared to the management of non-profit hospitals:
At a recent conference, one private equity official derisively talked about the inadequacies of local lay leaders eating their "stale bologna sandwiches" at Board of Trustees meetings, to draw a contrast with the unsentimental businesslike behavior of a board chosen by his firm.
What's next? How will this pain end? How will essential hospital services be provided to host communities if the company is unable to meet financial targets? As I noted in 2011:
Those seeking to regulate the behavior and financial decisions of for-profit hospitals will find that their post hoc authority will likely be insufficient to protect the public interest . . . .
Investors may come and go, but the community depends on its local hospital to provide high quality service. It is the residents of the community who are left holding the bag if the hospital corporation reaches the conclusion that ownership is not financially viable.
4 comments:
Paul - A couple of things: 1) Many of the for profit hospitals in other states are doing well because Medicaid enrollment was expanded in about half of the states under the ACA (some states chose not to accept the federal money for Medicaid expansion). This resulted in a lot less bad debt from patients who previously couldn't pay anything. Even before Romney Care in Mass we had something like 92% coverage but in some states you had (or still have) 20-30% of the population uninsured. So Steward did not see a bump in Medicaid reimbursements because we already had nearly 100% coverage in Mass before the ACA. 2) Not turning over the consolidated financial reports is either hiding poor performance or do they show Cerberus extracting large amounts of cash from the system (I'm sure they charge a regular fee for their management "expertise")? 3) Da La Torre has been nearly invisible for a long time.... has Cerberus taken over more of the management as Quincy and other losses piled up? 4) The system bet big on taking on Medicare ACO risk... I think they reported some gains there but probably nothing like they projected. 5) The fact remains that patients are choosing not to use Steward Hospitals. Not sure how you turn that around before the guys in New York take what they can get and dump it just like they walked away from Quincy as quickly as they did.
Steward is paying huge exec salaries to run this failed system, selling off anything valuable and when there is nothing left but a broken system and a pile of debt, Steward will go poof like other Delaware Corps in the past and the communities will be left without viable hospitals. thank you AG Coakley and your pal Delatorre
Let me begin by saying I have no inside knowledge, but that being said it wouldn't surprise me if Steward was having discussions with other local and national groups about selling out or partnerships of some kind.
De la Torre, couldn't comment on ongoing negotiations which would make him invisible.
Steward's closure of a big money drain like Quincy Medical Center could be a precursor to any deal.
There are many options for Steward to partner:
The major for profit chains:
The two largest chains are CHS and HCA.
Community Health Systems had some of its former hospital managers working for Steward at one point. I know some have since left. Not sure how many are still there.
Hospital Corp of America, owned Metrowest and St Vincents at one point and still owns two hospitals in New Hampshire, one of which Parkland Medical Center has some important relationships with Lahey Health.
Tenet (which bought out Vanguard) currently owns Metrowest and St Vincents, and Vanguard had a working agreement of sorts with Tufts Medical Center to develop a Boston area network. But that was a few years ago, and it is unclear if that agreement is still in force.
Note: three doctors groups recently separated from Atrius (which has an agreement with Beth Israel Deaconess [BID]) but the two of those groups - Reliant Medical and Southborough Medical, in Metrowest and St Vincents hospital territory are currently negotiating with that same BID.
Prime Healthcare currently owns Landmark Medical Center in Rhode Island.
So four out of the top 5 for profit chains - CHS, HCA, Tenet, Prime have current relationships in New England.
Any one of the for profit chains could also work in partnership with local Academic Medical Centers (as was being discussed between Vanguard and Tufts Medical Center), to purchase Steward to grow their networks.
There are also non-profit chains that might have an interest if Stewards value isn't "too high".
Trinity Health (a non-profit Catholic chain) just recently signed an agreement with St Francis a large hospital with affiliates in and near Hartford and also owns Mercy Medical Center in Springfield.
It should be remembered that the six core hospital of Steward were originally part of a Catholic non-profit chain.
Ascension Health, another large Catholic non-profit chain with a hospital in Connecticut, also is working in partnership with financial firms to purchase hospitals on a for profit basis. '
All of this is a long winded way to say that much negotiating could be happening.
Tufts Medical Center is also negotiating with Boston Medical Center on some type of deal. If they could negotiate something, maybe they could attract a large chain to take over Steward together.
BID in alliance with Atrius could try to team up with someone or go it alone.
Lahey health could try to go it alone north of Boston and in southern New Hampshire or team up with someone also to possibly to take over Steward.
I personally do not believe that Steward stays independent for much longer. Either they are bought out maybe in partnership with an academic medical center(s) or they enter some type of joint venture.
The Boston medical scene has certainly been interesting.
There are a couple of Steward Hospitals that would be attractive to other networks (Norwood, Good Sam and St. Anne's come to mind given location and occupancy rates). The others are largely old, empty hospitals without a PCP base big enough to fill them. They have a poor payor mix with largely Medicaid and Medicare and Cerberus has already sold off the medical office buildings, the labs, the hospitalists, etc.... who would be interested in any of the hospitals? Huge capital needs and lack of PCPs. The other networks would quickly take the Steward PCPs and some of the specialists but I don't think that most of their hospitals would draw any interest at all. They probably would end up like the Waltham Hospital site.... some medical space along with housing and retail.
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