Caritas Christi earns $3 million in 2003
Caritas Christi Health System, the large Catholic hospital network, turned around an operating loss to earn $3 million in the year ended Sept. 30, in part because of a one-time late-year $11 million payment from the state Medicaid program to compensate the system for treating a large number of poor patients.
Caritas, a hospital and physician organization led by Caritas St. Elizabeth's Medical Center in Brighton, posted 2003 revenue of $1 billion, up from $923 million a year earlier. The hospital system posted net income of $1.6 million in 2003. The network had an operating loss of $15.9 million in 2002 and a net loss of $8.6 million.
Caritas executives, who gave year-end results to The Boston Globe, declined to break out the system's performance in the fiscal fourth quarter. But according to the state agency that tracks results for the network's individual hospitals, most showed improved results in the last quarter, which an analyst said was partly the result of the one-time state payment and additional payments totaling $4.5 million from health insurers in the fourth quarter.
"At a very hard time for the hospital environment, we were able to achieve better than break-even results, and that's very good," said Dr. Michael Collins, Caritas's chief executive.
Another large Boston teaching hospital, Tufts-New England Medical Center, had an operating loss of $3.8 million in the fourth quarter ended Sept. 30 on revenue of $120 million. That's a narrower loss than the $4.9 million a year earlier when revenue was $130 million. In fiscal 2003, NEMC had an operating loss of $14.1 million on revenue of $407 million, a wider loss than the $12.6 million on revenue of $396 million in 2002.
Tufts, which has struggled with losses since 2001, said last year's included a $5 million one-time payment to dissolve its merger with Rhode Island-based Lifespan healthcare network. In December, trustees hired Ellen Zane, an executive with competitor Partners HealthCare, the parent organization of Harvard-affiliated Massachusetts General Hospital and Brigham and Women's Hospital, to turn around NEMC and develop a strategic plan. She started as chief executive in January.
Many Massachusetts hospitals are struggling financially, which executives say is partly a result of low payments from Medicaid and Medicare, state and federal programs that provide health insurance for the poor, disabled, and elderly.
Last spring, ratings agency Moody's Investors Service lowered its rating on Caritas Christi's bonds. Moody's analysts said they were concerned about five years of losses at the organization, due in part to high use of temporary nurses and reduced state aid from the distressed hospital fund. In addition, in fiscal 2002, Caritas Christi had a $12.9 million loss at its physician practice, the Caritas Medical Group. Moody's plans to release analysis of Caritas's 2003 results in several weeks.
Standard & Poor's analyst John Fargnoli, who is reviewing the network's financial results, said the system is "doing a little better" because of the extra payments from Medicaid and private insurers.
Collins said yesterday executives had been working all year to improve results and to obtain a supplemental Medicaid payment for Caritas Carney Hospital in Dorchester, which treats a large number of indigent patients. "This helps us until we can identify a more permanent solution," he said.
Collins said the system was also able to improve results by decreasing its use of temporary labor, partly by developing relationships with community colleges to hire new graduates and by developing a training program that helps nurse assistants return to school to become nurses. The system has increased its unrestricted cash by $18 million to $170 million, and the number of overnight patients grew 4 percent, he said.
Liz Kowalczyk can be reached at kowalczyk@globe.com.
