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Carney called strain on Caritas

O'Malley cites risk to hospital chain

Email|Print| Text size + By Jeffrey Krasner
Globe Staff / November 12, 2007

In an e-mail to Caritas Christi Health Care System staff and physicians, Cardinal Sean P. O'Malley said Caritas Carney Hospital is straining finances and putting at risk the entire six-hospital chain, which is owned by the Archdiocese of Boston.

"We are proud to provide care to all in need; however, with cash flow needs approaching $10 million annually, Caritas Carney's current operations are not sustainable without threatening our entire system of care," O'Malley wrote in a Nov. 5 memo, cosigned by the four other church officials who oversee the chain.

In the fiscal year that ended Sept. 30, Caritas Christi hospitals contributed $6.7 million to Carney Hospital. Despite the added money, along with a $4 million state subsidy, the Dorchester hospital still lost about $2.1 million.

The e-mail said pumping money from other Caritas Christi hospitals into Carney is an "acceptable short-term tactic." But long-term, it said, "the solution for Caritas Carney must be a shared responsibility," indicating that Caritas Christi is looking for financial assistance beyond the chain and the archdiocese. The e-mail did not say where additional money could come from, but added, "We will continue to work with others who we believe must share in this solution."

The Globe recently reported that Carney would be insolvent without cash from other hospitals in the chain. Public officials, including Mayor Thomas M. Menino, City Council President Maureen Feeney, and state legislators, are exploring ways to preserve Carney, which opened in South Boston 144 years ago and moved to Dorchester in 1953. Plans being considered by elected officials include selling the hospital to another healthcare chain and converting Carney from a full-service hospital to a community health center.

Menino said he expects to recommend an option for Carney, possibly this week, after consulting with healthcare officials whom he declined to identify.

Separately, Caritas Christi leaders are examining the possibility of selling, closing, or radically changing Carney, although they prefer to maintain it as an acute-care hospital.

A decision is expected by the end of the year.

The church officials' e-mail said two attempts to sell the hospitals to Catholic healthcare chains failed in part because the prospective buyers could not commit to investing enough money in the system.

As a result, Caritas Christi is pursuing an independent "go forward" strategy, the e-mail said.

We "are convinced that we have the experience and the resources to achieve our goals," O'Malley and the other church officials wrote.

In an interview Friday, Dr. John Chessare, interim chief executive of Caritas Christi, said a partner for the chain would need to invest at least $250 million, in addition to the roughly $80 million a year Caritas Christi has budgeted for investments in property and equipment.

But Chessare acknowledged it will be a challenge to attract that much money, because intense competition among hospitals in the Boston area results in very low returns on investment.

"To invest that amount of resources in Eastern Massachusetts is risky" for an outside partner, he said, "because the margins are so slim."

The $78 million that the chain plans to invest in its hospitals in the current fiscal year will pay for:

Linear accelerators for cancer radiation therapy at St. Anne's Hospital in Fall River and Caritas St. Elizabeth's Medical Center in Brighton.

A second cardiac catheterization laboratory at Caritas Norwood Hospital.

A new emergency room and advanced operating-room imaging at St. Elizabeth's.

Advanced imaging technologies for Caritas Holy Family Hospital in Methuen.

The chain also includes Good Samaritan Medical Center in Brockton.

A key part of Caritas Christi's "go forward" strategy is to clarify a muddled corporate governance structure in which boards at different levels sometimes clash, Caritas Christi officials said. Kenneth Quigley, president of Curry College in Milton and a member of Carney's board of trustees, will oversee a committee to study the problem.

The system's individual hospitals have boards of trustees, but trustees do not have a direct say in the hospitals' financial affairs, Chessare said.

A separate board of governors oversees the entire system. Ultimately, a group known as the Corporate Members of Caritas, which includes O'Malley and four other church officials, can override decisions made by the board of governors.

"Since most of our hospitals were entities on their own, there still is a bit of tension about who should be voting on strategic decisions," Chessare said. "We could have done a better job of identifying the precise roles and discussing it up front. Now, we need to go back and do a little cleanup."

As part of the strategy outlined in the e-mail, the chain plans to hire a permanent chief executive within 90 days. The chain has not had a permanent leader since May 2006.

Caritas Christi hospitals recently earned the highest inpatient satisfaction scores "that it has seen in years," the e-mail said, and the quality of care they offer is "as good or better" than other Massachusetts health providers.

Jeffrey Krasner can be reached at krasner@globe.com.

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