Friday, September 24, 2010

Raising the stakes

The proposed acquisition of the Caritas Christi system by the Cerberus private equity firm continues to be in the local news. Today's lede:

Caritas Christi Health Care executives have told union negotiators they will shutter St. Elizabeth’s Medical Center in Brighton and Carney Hospital in Dorchester if they can’t close a deal for the six-hospital chain to be bought by a New York private equity firm.

And further down in the story:

Caritas representatives asked for concessions from the nurses union, including a wage freeze, but no agreement was reached, the two said. The executives also urged more nurses to take an early retirement program introduced last spring.

Compare this to what was reported in this story just one year ago:

With economic pressures on Massachusetts hospitals starting to ease, the strongest recovery may be taking place at an organization that was one of the weakest financially: Caritas Christi Health Care.

By aggressively cutting costs and boosting revenue from medical care, the Boston-based Catholic hospital chain is on track to post operating income of $31.1 million for the fiscal year ending Sept. 30, compared to a $20.4 million loss last year.

The anticipated swing of more than $50 million has been achieved through a series of moves, Caritas officials said. The chain consolidated operations at its six Eastern Massachusetts hospitals, cut jobs and froze salaries, negotiated higher reimbursement rates from insurers, and recruited more specialists to perform more complex - and profitable - procedures. A new urology group, for instance, has performed hundreds of prostate operations this year.

....Unlike some other hospitals, which have resisted union organizing efforts, Caritas signed an agreement with the Service Employees International Union to permit “free and fair’’ elections. Groups of employees at St. Elizabeth’s and Caritas Carney subsequently voted to join the union. Although the labor contracts are likely to boost expenses, de la Torre said he is sympathetic to workers who live in the same communities Caritas hospitals serve.

Higher labor costs as a result of unionizing will be offset by more than $30 million in annual cost savings, said chief financial officer Mark Rich, including by having groups of specialists treat patients at more than one hospital, and by merging physicians’ administrative functions. “There’s no one silver bullet,’’ Rich said.


Anonymous said...

"....and recruited more specialists to perform more complex - and profitable - procedures. A new urology group, for instance, has performed hundreds of prostate operations this year."

There's a pretty good illustration of why fee for service should die. Need more revenue? Just gin up more procedures.

Then we have the union. It would be somewhat different if the $$ from the higher costs actually went into employees' pockets, but the SEIU has demonstrated a curious tendency to take the money itself. Who does unionization really benefit and why did Caritas roll over so easily?

And, are these productive uses of health care dollars?

Michael Pahre said...

Sounds like a ploy by management to extract labor concessions to improve Caritas's financial position.

If the financial situation were really that bad -- facing imminent closure! -- then that information would have been presented publicly to the AG and the general public as justification for the sale to Cerberus. But it's only being told quietly to select people who management wants to make wage concessions.

The AG should open a new investigation to determine if Caritas Management is engaged in public fraud and conspiracy to commit public fraud by not disclosing to the public (its "shareholders" as a nonprofit) its dire financial straits.

Keith said...

Lets use this example of Caritas as the poster boy for all that is wrong with healthcare and hospitals in general:

1. Lets prop up our failing business model by recruiting a group of urologists to perform lots of prostatectomies. Of course prostate removal will likely become to this decade of medicine what tonsillectomies were to the 50's and 60's when we finally discover the near uttter lack of benefit for well over 90%of the patients operated on. As I have illustrated to you before, this is another example of collusion between high paid specialists and the hospitals that recruit them to ply their high cost procedures that are often of unproven benefit. And you say hospitals are not the primary reason for increased health care costs?

2. Caritas tries to extract concessions from its nurses with wage freezes to balance its budget. Meanwhile, from 2006 to 2008, its CEO saw his salary go from ~550,000, to ~840,00 in 2007 and ~1 million in 2008. While CEO's seem very good at negotiating their next raise, they take forever to get their Form 990 returns done and we have no posted information as to what has occurred over the 2009-10 time frame. Meanwhile, Caritas does so poorly that it needs to be bought by a for profit entity.

Does nothing seem wrong to you with this picture?

76 Degrees in San Diego said...


catsandmusic said...

wait a second---Caritas lobbied to get exclusive rights to the patients covered by Celticare, in some cases abrogating established relationships with providers. Granted, this is not a huge subgroup. but many of these patients who once used other Boston hospitals now go-guess where--to St E's and Carney.

catsandmusic said...

Also, Paul. when Caritas was looking to move Saint Margaret's (OB-Gyn specialty hospital) out of a really dangerous neighborhood, they used the reason that it was better for Mom and baby to have a full-service hospital adjacent to it in case of an emergent non-OB event. I think this happened about 20 years ago. So if they close St. E's, that also leaves the OB facility free-standing again.

@NathanSpencer said...

From Twitter:

I wouldn't trust the current talk to be anything more than a push by the buyers. I don't think things are as bad as they seem.

Kim said...

From Facebook:

So what's the real story??

Anonymous said...

The second article is the one you want the Globe to print when you are trying to find a buyer for your distressed asset.

The first article is the one you want the Globe to print when you are trying to push the approval of the sale through the governmental bodies charged with protecting the public interest.

I see two "too bads" here: too bad we have a political monoculture in Massachusetts, and therefore insufficient scrutiny on the public side of this transaction. Caritas has lined up the unions, and therefore the Democratic party, and therefore the AG and the Governor. End of story...

The second "too bad" is that it is too bad that the Globe and local journalism has devolved to the point where they are incapable of remembering what they printed a year ago, and asking the same questions you are asking.