Plan to convert 6 Mass. charity hospitals to for-profit - a model for other areas?

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Mar 31 2010

The Boston Globe: "The New York private equity firm that last week struck a deal to buy Caritas Christi Health Care could build the chain of six Catholic community hospitals into a competitive lower-cost provider of medical services in Massachusetts, touting it as a profitable national business model in the age of health care reform, analysts say. Cerberus Capital Management plans to invest $830 million to acquire Caritas Christi and turn the charity into a for-profit venture. ... An increasing number of health insurance policies may well offer patients a choice: Go to a famous teaching hospital and pay more or go elsewhere and spend less. That could drive additional business to the Caritas network and make it more profitable" (Syre and Gavin, 3/30).

BNET: "The question is whether [$830 million] will be enough to enable Caritas, the second largest healthcare system in the Boston market, to compete with the leader, Partners Healthcare, which includes Massachusetts General Hospital (MGH) and the Brigham & Women's Hospital. ... Partners, which competes with community hospitals across the Boston area, also extracts much higher payments from insurers than its competitors are able to get. This revelation attracted a lot of attention after a state commission said that it was one of the reasons for the state's very high health costs" (Terry, 3/29).

Fall River Herald News: The system's president and CEO, Dr. Ralph de la Torre, "said observers shouldn't over-analyze the system's potential change to a for-profit. 'We know a lot of nonprofits that are not good citizens, and we know a lot of for-profits that are,' Torre said. 'Being for-profit is a tax status, not a mission statement. Our commitment remains unchanged, and since these things are not changing, I don't see our mission or vision changing at all'" (Richmond, 3/29).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.