The new owner of the Caritas Christi Health Care system isn’t done buying hospitals in Massachusetts.
Barely a month after acquiring the six-hospital chain for $895 million, Steward Health Care System LLC, the company formed by New York-based private equity firm Cerberus Capital Management to run the system, has agreed to buy two more hospitals – 124-bed Merrimack Valley Hospital in Haverhill and 57-bed Nashoba Valley Medical Center in Ayer.
Both hospitals are owned by Essent Healthcare of Nashville, Tenn., which didn’t disclose the terms of the deal. If approved, it would leave Massachusetts with only two other for-profit hospitals – MetroWest Medical Center in Framingham and St. Vincent Hospital in Worcester, both of which are owned by the Nashville-based Vanguard Health System.
Last month’s acquisition of Caritas Christi by Cerberus came with several conditions, including job and pension protection for the system’s 12,000 employees and assurances that the new owners wouldn’t cut jobs or hurt healthcare access in the commonwealth. The proposed deal between Steward and Essent is similar, in that Steward is promising to retain employees and management at the two hospitals and maintain their current levels of free care, community benefits and clinical programs, including psychiatric beds and in-patient behavioral health programs at Merrimack Valley.
Steward officials said the new deal is part of the health system’s plan to build an accountable care organization by integrating hospitals and sharing physicians, specialists and medical records.
“These communities are exactly the communities we want to serve in Massachusetts,” said Ralph de la Torre, the former Caritas executive who assumed control of Steward upon its launch by Cerberus, in an article in Thursday’s Boston Globe. “It’s all about bringing care to the patients, not bringing patients to the care.”
He said the two hospitals would retain their secular identity and be run as a separate unit under Steward. The six Caritas hospitals – St. Elizabeth’s Medical Center in Brighton, Carney Hospital in Dorchester, Holy Family Hospital in Methuen, Norwood Hospital in Norwood, Good Samaritan Medical Center in Brockton and Saint Anne’s Hospital in Fall River – were founded as Catholic hospitals and are retaining that identity.
Essent bought Merrimack Valley in 2002 and Nashoba Valley in 2003. Officials told the Globe the two hospitals are “modestly profitable,” but make less than other Essent-owned hospitals in Connecticut, Pennsylvania and Texas.
Michael Browder, Essent’s chief executive, said the Essent board’s decision to divest itself of its Massachusetts hospitals is fueled in part by the commonwealth’s challenging healthcare environment, in which officials are working to expand access and reduce costs by changing the way doctors and hospitals are paid.
“Steward is the perfect acquirer of these hospitals,” he told the Globe. “They’re home-grown. They’ve been in Massachusetts a lot longer than we have. They’ve been part of the debate over some of the things going on in Masssachusetts and some of the things to come.”
Unlike the Caritas Christi acquisition, the proposed deal won’t need approval from either the Massachusetts Attorney General’s office or the commonwealth’s Supreme Judicial Court because it doesn’t represent a transfer of non-profit assets to a private company. Steward will apply to the Massachusetts Public Health Council for new licenses for the two hospitals, a process which would likely lead to a review by the commonwealth’s Department of Public Health and public hearings.