AG urges change of course for Caritas

Archdiocese should give up control of operations, Coakley report says

Carney Hospital should become a mental health facility, while retaining primary and urgent care, the report said. (Suzanne Kreiter/Globe Staff)

Caritas St. Elizabeth's Medical Center in Brighton should abandon its role as a top-level academic hospital treating complex cases, and Caritas Carney Hospital in Dorchester should consider becoming a mental health center, says a report on the Archdiocese of Boston's hospital chain by Attorney General Martha Coakley.

The report, based on a four-month study, also urges the archdiocese to cede control of the operation of Caritas Christi Health Care System so that an independent board with expertise in healthcare management can run it. The board now answers to Cardinal Sean P. O'Malley.

The report is a stern indictment of the church's ability to run the six-hospital chain in an increasingly competitive healthcare environment.

"Unless they change course, they will continue to fall behind," Coakley said in an interview. "Our hope is this report will be a spur for them to do the things that are important ASAP."

The review was conducted by Health Strategies & Solutions Inc., a Philadelphia management consultant that specializes in healthcare. Coakley's office has oversight of nonprofit hospitals, including the Caritas Christi chain, and has worked with the archdiocese for several years to help ensure the viability of its hospitals.

Caritas Christi and archdiocesan officials said the report endorses some of the steps they have already taken to improve financial performance, including changing St. Elizabeth's to a community teaching hospital.

"We describe it as a validation of the programs put forth by the cardinal and the senior management of Caritas Christi," said James J. Karam, chairman of the system's board of governors.

Caritas Christi officials also said the hospitals have lower operating costs than most of their competitors, yet still provide first-rate medical care. The problem, they said, is they are paid less than competing hospitals despite providing the same services. Hospitals negotiate reimbursement rates individually with insurance companies, and many large hospitals have more negotiating clout than Caritas Christi.

In addition, the officials said, Caritas Christi hospitals have been hit hard by Massachusetts healthcare reform. They are not receiving money for providing free care, as they were under the old system, yet many of their patients - who are lower-income - have not signed up for low-cost or subsidized insurance. The result has been a revenue shortfall.

"It's hard to look at this report and say there aren't two glaring omissions," said James McDonough, chancellor of the archdiocese. "Free care and the disparity in reimbursement rates."

Caritas Christi officials said they are already working on Coakley's top recommendation, creating an independent and professional board to run the system. Under a plan approved by O'Malley, the church would have jurisdiction over Caritas Christi only in matters of religion, ethics, and sale of properties. The new board will have 15 members, each serving a maximum of nine years, and a chair serving for a maximum of three years. The cardinal will appoint three members.

Final approval of the plan is expected at the Caritas Christi board's next meeting later this month.

In practice, the church has not interfered in day-to-day management of the healthcare chain, said Dr. John B. Chessare, interim chief executive of Caritas Christi.

"The governance is catching up to our management," he said.

Coakley's report said St. Elizabeth's, the flagship of Caritas Christi and a teaching hospital of Tufts University, cannot continue to concentrate on tertiary care - treating complex cases.

"Caritas St. Elizabeth's has insufficient resources and capabilities to compete successfully for a wide range of tertiary care services in the highly competitive Greater Boston marketplace," the report said. It "should function as a community teaching hospital, with continued emphasis [and development of advanced capabilities] in two to three major service lines where it can be competitive."

Chessare said that Caritas Christi had already decided to change St. Elizabeth's mission to something similar to what the report suggests, and that changes it has already made are responsible for a "resurgence" at the hospital.

But recent statistics do not suggest a turnaround is in the works. In the fiscal year that ended Sept. 30, inpatient volume at St. Elizabeth's was down 6 percent compared to the previous year, the worst performance of any teaching hospital in Massachusetts. The report also said there has been an "exodus" of primary care and specialty physicians over the past few years at the hospital.

Carney Hospital, the institution with the weakest financial performance within Caritas Christi, must also change, the report said.

"Caritas Carney Hospital should consider the feasibility of transitioning to a mental health facility, while retaining selected primary care, urgent care, and diagnostic services," the report said, noting that there are enough beds in nearby hospitals to handle Carney's medical and surgical inpatients.

Elected officials have rallied to support Carney Hospital since the Globe reported last fall that the hospital has lost millions of dollars despite cash infusions from Caritas Christi and grants from the state.

Calling Carney "the jewel in my district," Council President Maureen Feeney said in a statement, "There is little doubt that Carney faces challenges. However, I am unconvinced that the future of Carney does not include acute care. This community needs the services that Carney provides."

Caritas Christi officials said they agree Carney needs to change but are waiting for a report from their own healthcare consultant before making any decisions.

The archdiocese has spurned offers of help from Mayor Thomas M. Menino and other elected officials.

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