Thursday, May 14, 2015

A Cerberus exit strategy for Carney Hospital: The SEIU

Jessica Bartlett at the Boston Business Journal reports that Steward Healthcare System, owned by private equity firm Cerberus Capital Management, has named Walter Ramos, CEO of DotHouse Health, a health center in Dorchester, to be the new CEO of Carney Hospital.  By all accounts, Mr. Ramos is an excellent choice, with a good administrative background and understanding of the needs of the neighborhood.

No, what's more interesting about Jessica's story is her placement of two sets of assertions.  Here's one from Steward's president:

“Carney Hospital is in the midst of an exciting resurgence. In recent years, Carney has consistently earned national awards for quality patient care, grown the number of primary care and specialist physicians, and significantly expanded available services and improved the facilities. We believe Walter Ramos will provide the leadership needed at this important time at the Carney.”

Here's the adjacent paragraph:

The change is the latest update at Carney, which saw its former president, Andy Davis, announce in January that he would be stepping down after only three years in the position. In a statement at the time, Davis announced he had been looking to leave the hospital for awhile. Under his leadership, the institution has continued to struggle financially, seeing a $1.3 million operating loss in fiscal 2011, a $10 million operating loss in fiscal 2012, a $9 million operating loss in fiscal 2013, and a $6.2 million operating loss for the first two quarters of 2014.

That trajectory of losses doesn't sound like "an exciting resurgence." Indeed, those are pretty big losses for a 159-bed facility.  Add to that the past problems retaining effective leadership for this hospital. As reported in the Dorchester Reporter in April 2012:

After 14 months at the helm, Savin Hill’s Bill Walczak is out as president of Carney Hospital. The sudden shake-up raises questions about the future of the Dorchester Avenue facility, which was sold to a private equity firm in 2010 and is now facing the appointment of its fourth president in two years.

So, best wishes for success to Mr. Ramos. It looks like he has a vote of confidence from the main union representing workers at Carney:

“1199SEIU members are looking forward to working closely with Walter Ramos in his new leadership position to help Carney Hospital continue to grow and improve,” said Veronica Turner, Executive Vice President of 1199SEIU, in a release.

Back in 2007, noting the ongoing financial problems at Carney, I made a suggestion that the SEIU could do even better than working closely with hospital leadership:

Why not . . . have the union purchase, own and operate Carney Hospital? Let the union show how it can handle the full panoply of issues of running a hospital and demonstrate how it can profitably operate a neighborhood facility without the kind of state aid that has been pouring into Carney for all these years. Let the union negotiate contracts with the insurance companies, encourage access for low-income patients, maintain high regulatory standards for patient care, and do all the other things required of hospital management, while, of course, providing excellent working conditions for staff members and physicians.

What better way for the SEIU to demonstrate its potential value to the community than to take on this worthy assignment and to do a good job at it?

It's not too late.  I bet Cerberus would be happy to sell the place at a hefty discount from its original purchase price.


Anonymous said...

After Steward walked away from all of their promises at Quincy Hospital, I don't think you can trust anything coming from Steward executives. Carney has been a mess for years and, as you correctly point out, received millions from the State of Massachusetts over the years to keep them open. I thought it was interesting to see they brought a lot of physicians over from Quincy. Bringing the PCPs might make sense (if they have decent patient panels) but adding specialists with an undersized patient base makes little sense and will just add on cost. Frankly, I don't think the SEIU or anyone else would be interested in such an underperforming hospital. That being said, real estate is on fire in Dorchester and Brighton and Carney and St. Elizabeth's are very large islands of land in a very dense city. I could see Cerberus selling off Carney if the financial losses continue over there. Again, they walked away from a bunch of promises in Quincy and their motive is all about money so that is what will drive their decision making.

Anonymous said...

Yes I agree nice condos @ carney, st e's & quincy what are they gonna do after. E.d. services expire in quincy

Anonymous said...

I always said. Former caritas hospitals prime real estate