Nonprofit Newswire | Buyout Firm Hopes to Gobble up Nonprofit Hospitals in Mass.

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March 25, 2010; Boston Globe | As we have mentioned previously in the Newswire, there is likely to be a lot of predatory activity, mergers, acquisitions and buying and selling in the hospital community in the near future. Yesterday’s news on this front was pretty major, at least in Massachusetts where the ownership of six traditionally Catholic-controlled hospitals serving largely low-income patients is in play. The history of these hospitals is deeply embedded in Boston’s history and dates back to the 19th century when nuns would beg in the street to support patient care.

Facing the burden of annual cash payments totaling $24 million for pension fund contributions and needing more capital to make improvements, the Catholic based Caritis Christi Health Care has agreed to be acquired by a private buyout firm best known for its failed effort to turn around the Chrysler Group. Cerberus Capital Management is said to be buying the state’s second-largest hospital group, in a deal worth at $830 million.

Cerberus will have to win several approvals before it can take ownership. These include a review and public hearing and an okay from the state’s Supreme Judicial Court which will take recommendations from Attorney General Martha Coakley after she fully reviews the situation. Approval also is needed from the Catholic Archdiocese of Boston, which previously ran the hospital group before it became an independent charity in May 2008.

While Cerberus failed as an automaker, most of its other investments have proven more successful. The Boston Globe reports that Talecris Biotherapeutics Holdings Corp., a small North Carolina biotech it bought for $90 million and took public last year, is now worth $2.5 billion.

Approval may not be a walk in the park. There is a good deal of concern about Cerberus’ lack of track record in the medical field and patient care according to today’s Boston Globe. The last such ruling in Massachusetts was in 2002 when former Attorney General Reilly warned “The public should be mindful that other for-profit operators have bought and sold community hospitals,’’ his office wrote, “sometimes at a quick pace and sometimes to the dismay and disruption of the communities.’’

Steve Rosenfeld of Community Catalyst, a health care advocacy group, weighs in. “How do you determine whether their approach to patient care is friendly to the needs of patients? [It] just frightens the heck out of me.’’—Bruce Trachtenberg and Ruth McCambridge