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Letter to Public Health Commissioner John Auerbach from Health Care for All

Letter to Public Health Commissioner John Auerbach from Health Care for All

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Published by BostonGlobe
On proposed Caritas Christi deal
On proposed Caritas Christi deal

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Published by: BostonGlobe on Sep 21, 2010
Copyright:Attribution Non-commercial


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September 21, 2010Commissioner John AuerbachDepartment of Public Health250 Washington StreetBoston, MA 02108RE: Caritas Christi/Cerberus Proposed TransactionDear Commissioner Auerbach:We are writing to express our serious concerns with the rapidly movingprocess for government approval regarding the purchase of the non-profitCaritas Christi Health Care System (Caritas) by Steward Healthcare SystemLLC (Steward), a subsidiary of the Wall Street private equity firm CerberusCapital Management (Cerberus). While we understand the desire of theproponents to move this sale forward quickly, we urge the Department of Public Health to conduct this review in a deliberate, transparent, andinclusive manner.As you are aware, this proposed conversion is unprecedented in theCommonwealth. This complex transaction involves the state’s second largesthospital chain and tenth leading employer. The sale could impact access tovital public health services in many communities and has far reachingimplications for the future of the state’s healthcare system. News reportsdetail Cerberus’ interest in purchasing as many as six additional hospitals toadd to their network.We urge the Public Health Council to hold their vote on Steward’s applicationfor six Determination of Need (DON) licenses until after interestedstakeholders have the time and opportunity to discuss and negotiateconditions in the proposed deal with the proponents and/or governmentofficials.Cerberus ownership of the Caritas network brings with it many risks. As aprivate equity fund, Cerberus’ bottom line obligation is to its investors, not tothe Commonwealth, or to the patients in the communities served by theCaritas system. Cerberus, like many other private equity funds, has a trackrecord of saddling acquisitions with debt while extracting significant returnsfor itself and investors. Cerberus’ history is marked by abandonment of poorly performing companies without regard for community impact. In thiscase, Cerberus is entering an industry where it has no experience, and isplacing itself in a fragile situation where the consequences of failure and
abandonment could be life threatening. Cerberus’ need to produceinvestment returns raises real concerns about the potential for its financialsuccess to come at a great cost to Massachusetts’ healthcare system.Specifically, we ask you to require Cerberus to provide a detailed businessplan for public comment and analysis and to provide the public a forum toprovide feedback. The public must have the opportunity to examineCerberus’ business plan and how it will spend its proposed $400+ million of capital investment. Without this vital information about Cerberus’ financialand operational plans, interested citizens, community groups, and electedofficials are unable to form or ask pertinent questions about this deal andhave no basis on which to truly evaluate if the transaction is indeed in thepublic interest.Secondly, we ask you to ensure a deliberative and transparent process isfollowed. The six community hearings held in rapid fire succession in Juneand July of this year provided limited opportunities for true engagementbetween the community and the proponents.
Given the stakes for theCommonwealth and its citizens, we are concerned about the rush to approve such acomplicated transaction
. Community-based groups have articulated a set of issues and concerns that they would like addressed to protect and enhancethe health care services that these community hospitals provide. Othertransactions involving the sale and conversion of single non-profit to for-profit hospitals, both in Massachusetts and in other states, have beenevaluated and approved on a much more extended timeframe.Our understanding from our involvement with similar sales in the past andfrom conversations with staff from the Determination of Need Program isthat individual communities are expected to broker agreements with Caritasand Cerberus/Steward to create a list of enforceable conditions that willattach to any DON licenses granted to Steward. Caritas has been preparingfor the deal for years-and Cerberus for numerous months-while communitieswere only recently brought into the process. If the responsibility forbrokering a deal is to fall to individual communities throughout the state,more time is needed to craft DON licensing conditions that will protect publichealth, consumers, and satisfy the array of stakeholders. The proposed sale would remove the Caritas hospitals from publicownership, potentially impacting access to essential health services for ourstate’s poorest residents while having far reaching implications for the futureof Massachusetts’ healthcare system. Patients, community organizations,
and Massachusetts’ taxpayers have the right not just to be heard quickly, butto have the time and materials to fully engage in the public commentprocess.We look forward to speaking with you. Please contact Matt Wilson at HealthCare For All at 617-275-2940 ormwilson@hcfama.org.Sincerely,Amy Whitcomb Slemmer, Executive DirectorHealth Care For AllHealth Access CoalitionLawrence General HospitalSignature Healthcare Brockton HospitalSouthcoast Hospital GroupMatt Selig, Executive DirectorHealth Law AdvocatesDan Driscoll, Chief Executive OfficerHarbor Health ServicesRob Restuccia, Executive DirectorCommunity CatalystRepresentative David TorrisiRepresentative Steven D’AmicoSenator Susan TuckerSenator Patricia JehlenAllan Rodgers, Executive Director The Massachusetts Law Reform InstituteAl Norman, Executive DirectorMass Home Care AssociationLaurie Martinelli,Executive DirectorNAMI MassSheldon H. Barr, President and Chief Executive OfficerHealth Imperatives

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