Caritas purchase wins final state approval
The buy-out of Caritas Christi Health Care, the area's second largest hospital system, won its final state approval this morning when a single justice of the Supreme Judicial Court of Massachusetts issued a declaratory judgment permitting the acquisition to go forward.
Under the judgment from Associate Justice Francis X. Spina, the Boston-based Caritas chain of six Catholic hospitals across eastern Massachusetts will be allowed to convert from a nonprofit organization to an investor-run business by transferring its assets to New York private equity firm Cerberus Capital Management.
Spina also ordered Caritas and Cerberus to implement several ancillary agreements that were outlined as conditions for state Attorney General Martha Coakley's recommendation of the purchase.
They include an enforcement agreement in which the attorney general's office will enforce post-closing provisions of the buy-out deal; a pension enforcement agreement in which the new owner will fund hospital employee pensions frozen by the Roman Catholic Archdiocese of Boston at the end of 2003; and an assessment and monitoring agreement under which Caritas will fund a five-year monitoring of its operations after Caritas becomes privately owned. When the sale is completed, plans call for Caritas to be managed by a Cerberus holding company called Steward Health Care System LLC.
"We appreciate the thorough review by Justice Spina and the Supreme Judicial Court," Caritas spokesman Chris Murphy said this morning. "Now that the sale has received the required regulatory approval, Caritas and Steward will be working to close the transaction in the coming weeks. Once finalized, this sale will ensure the future of our system, the jobs of our employees, and the pensions of our retirees."
Spina's six-page memorandum and judgment cited Coakley's findings that the acquisition is in the public interest because Caritas was in "a precarious and unsustainable financial situation and faces an increasingly challenging and turbulent environment."
Caritas will become the state's largest for-profit health care company. It is expected to move aggressively to expand its reach in Massachusetts and beyond as the national health care system absorbs more insured patients and seeks to contain costs and deliver health care more efficiently.
Justice Spina, who conducted a hearing on the Caritas purchase on Oct. 21, took eight days to rule on the matter. His judgment came on the last work day of the month, two days before the asset purchase agreement between Caritas and Cerberus was set to expire.
Supreme Judicial Court spokeswoman Joan Kenney said Spina would not be available for comment, citing the standard practice of the state's highest court not to discuss rulings.
"The decision speaks for itself," Kenney said.
The acquisition will inject hundreds of millions of dollars in capital into the financially strained Caritas systems and keep all six hospitals open for at least three years. Cerberus has also agreed to fund the pensions of about 13,000 employees and retirees. The hospitals are St. Elizabeth's Medical Center of Brighton, Carney Hospital of Dorchester, Good Samaritan Medical Center of Brockton, Norwood Hospital, Saint Anne's Hospital in Fall River, and Holy Family Hospital in Methuen.