With healthcare reform and the country’s slow recovery from a recession ready to change the healthcare delivery landscape, hospitals and networks from Massachusetts to Hawaii saw the opportunity in 2010 to change their focus, merge or – in one notable instance – spring back to life.
Leading the way was the Caritas Christi Health Care system in Massachusetts, which in October cleared most of the hurdles necessary to complete its $830 million sale to New York private equity firm Cerberus Capital Management. The acquisition, which places the non-profit, six-hospital, 12,000-employee system back into private hands, was briefly held up over concerns over charitable care, access and job and pension protection, before a five-month negotiation process produced a landmark agreement.
Massachusetts officials touted the deal as a necessary step in the evolution of a network providing critical healthcare services to hundreds of thousands of people.
Boston Mayor Thomas M. Menino has said the deal “gives Caritas an opportunity to continue its mission.” He estimated the conversion of the health network to a for-profit chain would add $7 million in real estate tax revenues annually.
By the end of the month, another merger hit the headlines, this one a little farther south. The Johns Hopkins Health System, based in Baltimore, announced the acquisition of the Washington, D.C.-based Sibley Memorial Hospital, giving the venerable network a foothold in the nation’s capital and access to its large – and affluent – international population.
The deal gives Sibley much-needed financial stability and a chance to integrate its cancer care operations with Johns Hopkins’ clinical trial expertise. Meanwhile, Johns Hopkins – which acquired Suburban Hospital in Bethesda, Md., last year and is set to acquire All Children’s Hospital & Health System in Tampa, Fla. – has a stake in a region dominated by rival MedStar Health.
In Michigan, meanwhile, the Saint Joseph Mercy Health System, a seven-hospital network covering six counties and one of the state’s largest networks, announced a merger in October with IHA, a physician group practice employing more than 150 doctors and 40 nurse practitioners, physician assistants and nurse midwives in 32 practices in 47 locations. The deal was seen as a large-scale version of what many hospitals and networks are looking to do – namely, acquire physician practices or networks to expand their community care services and give physicians a stable financial base.
“Hospitals and physicians together are facing future expectations for rapid improvements in quality of care and value as accountable health networks that would be difficult to achieve independently,” said Mary Durfee, MD, IHA’s president and quality medical director. “This alignment will create a fully integrated health system able to deliver superior quality of care that is coordinated and safe.”
In Hawaii, The Hawaii Medical Center filed plans in April to convert two bankrupt hospitals to non-profits, a reorganization designed to save the network some $6 million a year and improve community relations.
“When you are for profit, you’re not as fully integrated into the community,” said Salim Hasham, HMC’s chief operating and restructuring officer.
Not all the news was good, St. Vincent’s Hospital Manhattan filed for bankruptcy in April and closed its doors shortly afterward, depriving thousands of caregivers of their jobs and leaving New York’s Greenwich Village without a key source for healthcare. Officials of the 160-year-old hospital had cited more than $1 billion in liabilities in filing for bankruptcy. City officials said they couldn’t stop the process.
“A private corporation’s board of directors voted themselves out of business,” said Claudia Hutton, a spokesperson for the New York State Health Department. “Because they are a hospital, we are involved in making sure the overall health of the community is protected, but we cannot force a private company that is losing millions of dollars a week to stay in business.”
And while one hospital closed, another made plans to re-open. In August, Illinois Gov. Pat Quinn announced plans to renovate and re-open the Carmi-White County Hospital in Carmi, which had been closed for five years. Quinn, who earmarked $3 million in state funding to help re-open the hospital, said it would provide needed jobs and healthcare in a region of the state hit hard by the recession and lacking easily accessible services.
“People living in rural parts of our state do not have the luxury of taking a short drive down the street to see a doctor or visit the hospital,” Quinn said in an Aug. 28 statement announcing the grant money. “People in every corner of Illinois should have access to quality healthcare. This capital funding will enable the residents of White County to have access to critical medical care, while creating good-paying jobs.”