The new owners of a string of hospitals in and around Boston are setting their sights on a financially strapped healthcare system in Florida – their first of what could be several ventures outside Massachusetts.
The Steward Health Care System, which was formed in the wake of last year’s purchase of the Caritas Christi healthcare system – and which has since acquired two more hospitals in Massachusetts – has asked for an exclusive, 60-day time period to fashion a bid for the Miami-based Jackson Health System. The government-run six-hospital chain serves large numbers of poor and uninsured residents and has reported losses of almost $350 million over the past two years.
Reports indicate Steward may offer $600 million in cash and $500 million to cover debt, though Steward officials have asked to look at Jackson’s books before making a formal offer.
Steward was created by the New York private equity firm Cerberus Capital Management following Cerebus’ November 2010 acquisition of the six-hospital Caritas Christi chain for an estimated $895 million. Led by former Caritas chief executive Ralph de la Torre, the company followed that deal with the acquisition of Merrimack Valley Hospital in Haverhill and Nashoba Valley Medical Center in Ayer, and has made no secret of plans to expand outside Massachusetts.
The Jackson Health System, which could run out of cash as soon as this summer, has attracted interest from at least one other investor, and analysts have said that whoever takes over the struggling system will have to work hard to turn things around. Any deal would have to be approved by the Miami-Dade County Commission, which is taking over negotiations from the Public Health Trust, which oversees the system.
“This is a much more challenging situation than Caritas Christi,” said Paul B. Ginsburg, president of the Washington, D.C.-based Center for Studying Health System Change, in a recent interview with the Boston Globe. “Jackson is starting from the bottom.”
In a recent story in the Miami Herald, a letter sent to Jackson officials by de la Torre indicated Steward would “assume all responsibility for the operations of JHS by acquiring all of the property, plant and equipment and operations,” and would help fund an organization chosen by the county to “explore the feasibility of JHS remaining an independent organization and still being able to fulfill its mission.”
The letter also pledged “at least $600 million over an agreed upon timeframe in capital for infrastructure, information technology, equipment and new programs.”
Several members of the Public Health Trust, at a meeting this week, said Steward’s offer is intriguing, but they would not agree to the 60-day window. Trust member Joe Chairman, who is also chairman of the Miami-Dade County Commission, told the Miami Herald that he and de la Torre are scheduled to meet later this week. He also said it would be “totally, totally premature” to enter into an agreement with Steward, and that selling the health network to a for-profit entity like Steward should be a “very, very, very last resort.”
Martha Baker, president of the Service Employees International Union Healthcare Florida Local 1991, which represents 5,000 registered nurses, attending physicians and healthcare professionals in Jackson, criticized officials for considering a sale of the health system. She said the bid underscores the problems plaguing the health system and urged officials to find a way to keep the publicly run system afloat.
Jackson Health employs more than 12,000 people and includes the flagship Jackson Memorial Hospital, the primary teaching hospital of the University of Miami, as well as a children’s hospital, rehabilitation hospital, mental health hospital, two community hospitals, four primary care centers, 17 school-based clinics, two long-term nursing facilities and an outpatient diagnostic center.
It’s one of 14 health systems in the Safety Net Hospital Alliance of Florida. Safety Net hospital reportedly comprise only 10 percent of the state’s hospitals, yet provide more than half of all charity care and nearly half of all Medicaid hospital care in the state.