Caritas Christi hires strategic adviser

Caritas Christi Health Care, the Catholic hospital chain owned by the Archdiocese of Boston, has hired a consulting firm to evaluate the system and suggest a business strategy, though it says it is not currently considering selling the hospitals.

Caritas told employees in a memo yesterday it hired Navigant Consulting Inc. of Chicago, a publicly traded company that specializes in healthcare companies. The firm advises ``large companies facing the challenges of uncertainty, risk, distress, and significant change," according to its website.

``The purpose is simply to conduct an assessment of Caritas' position in the market, what it's done recently, and what its prospects are," said John A. Kaneb , chairman of HP Hood LLC and chairman of the committee searching for a chief executive to head the chain's six hospitals. ``We want to see what opportunities there are for Caritas to do more and do better, and what obstacles there are to specializing in certain areas."

A sale is ``not in our plans," Kaneb said. ``That doesn't mean things won't be considered down the road."

Caritas was rocked in May when its president and chief executive, Dr. Robert M. Haddad , was forced to resign over allegations he sexually harassed women in his office. Haddad had been on the job only two years, and his predecessor had also been forced to resign by church leadership.

Kaneb said the search for a chief executive will be delayed until after Navigant releases its report, expected by the end of November.

``We need to get this done and figure out what we're going to do," said Kaneb. ``This is a good time to do it, when the decks are more clear, as opposed to when you have a CEO in office."

As a Catholic-run hospital group, Caritas might find it more difficult to find a buyer than a secular hospital system because of its religious mission and opposition to birth control and abortion.

St. Elizabeth's Medical Center in Brighton, Caritas' flagship hospital, has 400 beds and is affiliated with Tufts University School of Medicine. The system also includes Caritas Carney Hospital in Dorchester, Caritas Good Samaritan Medical Center in Brockton, Saint Anne's Hospital in Fall River, Caritas Holy Family Hospital in Methuen, and Caritas Norwood Hospital.

Though it is the second-largest hospital system in Massachusetts behind Partners HealthCare, Caritas has a history of underperforming. It lost millions of dollars annually between 2000 and 2004, except in 2003 when it turned a modest profit.

``Clearly, they have been among the weaker elements in our healthcare system for several years," said Stuart Altman , dean and professor of national health policy at the Heller School at Brandeis University.

``How they choose to restructure themselves to be stronger will require some very strategic thinking, including considering whether it's necessary to have all the hospitals they have."

Last year, however, marked a turnaround as Caritas earned $33 million on revenue of $1.2 billion, and it was the first time all six hospitals were profitable.

``Fiscal year 2005 results are impressive in light of the historical financial track record of the organization, which has not generated a positive operating margin since the mid-1990s," wrote Pamela Federbusch , a Moody's Investors Service analyst, in a March report. Results ``are impressive and surpass what we had considered aggressive financial targets to meet."

Still, Moody's said Caritas faces major challenges. The hospital system was able to meet its targets largely by trimming costs. But at the same time, treatment volume -- measured by patient admissions and outpatient procedures -- declined 1.78 percent. That downward trend accelerated in 2006, with St. Elizabeth's posting a 6.4 percent drop in volume in the first fiscal quarter that ended Dec. 31, according to Moody's.

``The ability to generate top-line growth needs to be addressed through physician recruitment and competitive branding," wrote Federbusch. ``Volume declines through the first quarter . . . do not bode well for the system."

Ellen Lutch Bender , president of Bender Strategies LLC, a healthcare strategy consulting firm in Boston, said Caritas hospitals haven't been integrated into a cohesive network. She has noted that the system also has a history of poor leadership, aging infrastructure, and mediocre bond ratings, increasing borrowing costs.

``Caritas has to do something profoundly different," said Bender. ``The Caritas of the future won't look like the Caritas of today."

Jeffrey Krasner can be reached at krasner@globe.com. Christopher Rowland of the Globe staff contributed to this report.