http://www.boston.com/business/healthcare/articles/2010/09/24/caritas_warns_of_2_hospital_closures/
Survival depends on selling chain, firm tells union
By Robert Weisman, Globe Staff
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.
The warning was made during contract talks last week with the Massachusetts Nurses Association, according to two people who attended the meeting. The association represents nurses at four Caritas hospitals.
At the Sept. 15 session — which focused on nurses at the flagship St. Elizabeth’s — executives also talked of mounting financial pressures stemming from an increase in the Catholic hospital system’s unfunded pension liability, said the two people at the meeting, who spoke on the condition of anonymity because they are not authorized to discuss the negotiations.
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.
The meeting, held at nurses union headquarters in Canton, was held as Caritas awaits state government approval of its plan to be purchased by Cerberus Capital Management.
Attorney General Martha Coakley will make a recommendation to the Supreme Judicial Court of Massachusetts, which would have to approve the conversion of nonprofit Caritas into a profit-making business. The state Public Health Council, meanwhile, must issue new licenses for the Caritas hospitals.
State officials are expected to make their rulings this fall.
Caritas employs about 12,000 people overall, including 1,900 at St. Elizabeth’s and 1,150 at Carney. It also operates Norwood Hospital, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen, and Saint Anne’s Hospital in Fall River.
Chris Murphy, Caritas spokesman, declined to comment on the Boston-based hospital chain’s pension shortfall or its contract talks with St. Elizabeth’s nurses. “I’m not willing to speculate on what will or will not happen if the acquisition by Cerberus does not close,’’ Murphy said.
Julie Pinkham, executive director of the nurses association, who attended the meeting, also would not talk about details of the bargaining session. But she said the union has understood that Caritas needs more money to keep operating the two Boston hospitals. Cerberus has promised to invest about $400 million in the system to make renovations and other overdue upgrades.
“The fact is that if this deal doesn’t go through, everyone knows we have problems,’’ Pinkham said.
Pinkham said she didn’t consider the warning of potential hospital closings by Richard Kropp, Caritas’s senior vice president of human resources, to be a threat.
Kropp spoke to the nurses prior to the negotiating session. Later, Michael Bertoncini, the chain’s deputy general counsel, also said St. Elizabeth’s and Carney could be closed if the Cerberus deal collapses.
Others who attended, however, said the warnings were made as Caritas pressed the nurses union on proposed cost cuts to help shore up St. Elizabeth’s finances. In addition to seeking a wage freeze, they said, the executives contended that they needed about 60 more nurses to take early retirement across the Caritas system by Sept. 30. More than 90 have agreed to do so since last spring, and Caritas recently sweetened the terms of its offer.
Nurses at St. Elizabeth’s and other Caritas hospitals, while recognizing the system’s fragile state, are concerned about how the proposed reduction in staffing levels will affect their ability to work with patients, the two people at the meeting said.
While the Caritas system posted operating income of just over $30 million last year, St. Elizabeth’s and Carney have long been among the financially weakest of its six hospitals. Both serve populations that include many low-income residents insured by Medicaid. Payments to the hospitals from the state program do not cover the complete cost of medical care. Both hospitals also have staffs of veteran employees who are at or near the top of their pay scales.
Under its tentative agreement to acquire Caritas, unveiled March 25, Cerberus has also agreed to spend $430 million to $450 million to pay off pension liability and other system debt, as well as make other investments.
The agreement doesn’t specify how much will be earmarked to fund the Caritas pension shortfall. But chief executive Ralph de la Torre said in March that the system would have to contribute $24 million a year for the next 13 years to keep the pension funded.
At the bargaining session in Canton, Caritas executives spoke of an additional $45 million to $50 million pension shortfall that was discovered during an assessment of the retirement system, according to the people at the meeting.
The nurses association, along with several other unions that represent Caritas workers, have endorsed the deal with Cerberus and joined in a letter sent Wednesday to David Spackman, director of the attorney general’s division of public charities, urging its speedy approval.
Another coalition, which includes a group of competing hospitals, has urged the attorney general’s office and the state Department of Public Health to slow down the approval process; make information, data, and analysis from their reviews public; and consider placing conditions on the Caritas acquisition.
Separately, a group of Catholics opposes the sale, warning that Cerberus will not maintain the religious identity of the hospitals for more than three years.
Robert Weisman can be reached at weisman@globe.com.
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