Half the Caritas story
By Steven Syre
Globe Columnist / November 16, 2010
The sale of Caritas Christi Health Care to a private equity firm finally closed on Nov. 6, after a long and very public review that ended with a stamp of approval from the state Supreme Judicial Court. But the real action is only beginning.
Ask Caritas executives what happens next, and they point to an ambitious list of improvements at many of its six Massachusetts hospitals. All of those projects — from a cardiac catheterization lab at Norwood Hospital to a new cancer treatment center at St. Elizabeth’s Hospital in Boston to a new operating rooms at St. Anne’s Hospital in Fall River — are on track to be completed next year.
But all those laudable projects are surely only half the story. The other half: Caritas expansion plans that will almost certainly involve trying to buy other hospitals and physician groups or entering business affiliations with other practices.
Caritas executives have much less to say on that subject, and their comments are vague. “Our goal is to bring quality health care to the communities of Massachusetts, and we will pursue that goal through a variety of strategies,’’ says Christopher Murphy, Caritas spokesman.
See what I mean?
Private equity investors did not buy Caritas and turn it into a for-profit medical complex for the purpose of standing still. Caritas executives say they want to improve business by reducing “leakage’’ — patients leaving its suburban medical settings to be treated in Boston teaching hospitals.
But getting bigger will also mean buying hospitals and attracting more doctors to drive increasing patient volume.
Which hospitals? I don’t know, and no one at Caritas would ever tell me. Some smaller institutions, such as Morton Hospital in Taunton, might fit into the Caritas geography. Two other Massachusetts hospitals already owned by a for-profit company, Nashoba Valley Medical Center in Ayer and Merrimack Valley Hospital in Haverhill, could be a good match.
But the most likely deals in Massachusetts would probably match a seller’s declining financial health with Caritas cash. There is no shortage of local hospitals with money troubles. I’d bet the farm a few of them end up in the Caritas portfolio.
The pursuit of doctors is more of a free-for-all. Hospital groups can buy physician practices outright, and often do. But they can also use all sorts of financial carrots to convince doctors to affiliate without doing an actual sale. Hospitals can win big market share if they win the hearts of the right doctors.
Dianne Anderson, president of Lawrence General Hospital and one of those most vocal critics of the Caritas sale, was well aware of that. Caritas owns Holy Family Hospital in Methuen, and Anderson worried how the market in her area would change. It’s no coincidence Lawrence General formalized an affiliation with Beth Israel Deaconess Medical Center last month, weeks before the Caritas sale won final approval. Caritas has even struck deals with doctors well outside the service areas of its own hospitals. A recent affiliation with doctors on Cape Cod won’t send patients to Caritas hospitals, but it will make money by providing the doctors with support services. The Cape Cod doctors will also help bulk up the physician network organization that Caritas can use to negotiate better contracts from insurers.
Caritas Christi has made a lot of news in the last year. It’s going to stay in the headlines for the foreseeable future. People coming, people going:
- Jim Segel, US Representative Barney Frank’s right-hand man on financial services, plans to return to Boston by year’s end. Segel, who has served as special counsel to Frank for the past four years, was involved in this year’s landmark legislation on financial services regulation and became a familiar face to executives, academics, and activists with an interest in its outcome. Segel, a lawyer and former state representative, says he hasn’t decided on the next career move.
- Joe Alviani, onetime state economic affairs secretary, will report to work as a new vice president for government affairs at Partners Healthcare next week. He happens to be moving in as Tom Glynn, longtime Partners chief operating officer, leaves the company.
- Steve Demirjian, a hedge fund manager in Boston, is on the move again. He founded Integrity Capital Partners, later took his hedge fund to Riversource Investments, and recently purchased the fund back. Now he’s setting up shop at Cadence Capital Management in Boston as manager of what will be called the Boston Integrity Fund.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
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