BRIGHTON -- The Archdiocese of Boston’s Caritas Christi Health Care announced March 25 that it will be sold to a New York investment firm but that the “Catholic identity” of the system and member hospitals will be preserved.
According to Caritas, it has signed an agreement to be acquired by Steward Healthcare System LC, a newly formed affiliate of investment firm Cerberus Capital Management.
Under the terms of the acquisition, Caritas will continue to be managed by its current Massachusetts-based executive team, maintain employment levels, as well as compensation and benefits arrangements. Caritas Christi is the second largest health care system in New England and the 10th largest employer in the state. The organization’s network consists of six hospitals in Brighton, Brockton, Dorchester, Fall River, Methuen, and Norwood.
The agreement also stipulates that the six Caritas Christi hospitals will retain “their Catholic identities, and their existing policies on charitable and pastoral care, community benefits, and approach to labor relations from a social justice perspective.”
The transaction is subject to customary closing conditions, including approvals from the Massachusetts Attorney General and the Massachusetts Department of Public Health, as well as the approval of the Archbishop of Boston.
In 2007, Caritas had been in negotiations with Ascension Health, a national Catholic health care system. Those talks ended in June 2007 without an agreement.
Caritas said the acquisition and the conversion of the system to a taxable entity are expected to generate significant state and local tax revenues. The process for obtaining the necessary approvals will begin immediately.
According to Caritas, the transaction will provide the Caritas health care system with approximately $830 million of capital support, including the assumption of all pension obligations for current and former Caritas employees, the repayment of virtually all of the system’s outstanding debt, a significant capital investment to fund operations, and a commitment to approximately $400 million of capital projects, including six major construction projects that will provide immediate upgrades to each of the Caritas Christi hospitals.
“Caritas Christi has a clear vision for the future of the system and is committed to offering world-class medical care and employment opportunities in the communities we serve. We are committed to creating an integrated community-based Accountable Care Organization,” said Dr. Ralph de la Torre, president and CEO of Caritas.
“Cerberus is pleased to be making a long-term investment that will help ensure the viability and future success of the Caritas Christi health care system,” said W. Brett Ingersoll, co-head of private equity at Cerberus. “Caritas’ leadership and its 13,000 dedicated employees have done an outstanding job of stabilizing operations over the past few years in a very challenging economic environment. Caritas is the region’s largest community hospital network, and our investment will give physicians, nurses and other health professionals the additional tools they need to deliver world-class care to patients in the communities where they live.”
In addition to the financial benefits, Caritas said the purchase agreement contains a number of substantial non-financial commitments by Cerberus, including that the system will:
-- Remain headquartered in the Greater Boston area;
-- Keep current management in place;
— Maintain employment levels, and compensation and benefits arrangements;
— Continue to run the Caritas Christi hospitals as Catholic health care providers in accord with the Ethical and Religious Directives for Catholic Health Care Services adopted by the United States Conference of Catholic Bishops;
— Maintain existing policies on community benefits as well as charitable and pastoral care;
— Maintain medical residency and teaching programs; and
— Respect the commitments that Caritas has made to charitable donors to the system.
“Cerberus’ planned investment in the Caritas hospitals will provide needed resources to serve patients with excellent quality and compassionate care long into the future. We look forward to the establishment of a Stewardship Agreement, whereby the Archbishop of Boston will assure Caritas continues to be guided by Catholic teaching, morals and the Ethical and Religious Directives,” said Father Richard M. Erikson, Vicar General and Moderator of the Curia.