2010 News

Possibility of hospital sale worries city

06.10.2010

By Paul Tennant ptennant@eagletribune.com

HAVERHILL — There's talk about Haverhill's hospital being sold — and local leaders are bracing to make sure the city does not lose its medical center.

After hearing reports that Caritas Christi, the chain that owns Holy Family Hospital in Methuen, is interested in buying Merrimack Valley Hospital, the mayor and others said they are watching closely.

Mayor James Fiorentini said he wants to make sure the facility is "always a hospital no matter who owns it."

"It depends on what they do with it," he said when asked what a change in ownership of the hospital could mean for Haverhill.

"We'll take a wait-and-see attitude," he said.

Fiorentini said if the hospital is sold, he will stress to both Caritas and current owner Essent Healthcare that Haverhill needs a medical center.

According to reports in the Boston Globe, the sale is being discussed. That has one city leader confused.

"I can't imagine any company would want to own two hospitals so close together," City Councilor Mary Ellen Daly O'Brien, a veteran nurse manager at Merrimack Valley Hospital, said, referring to the Merrimack Valley Hospital and Holy Family Hospital.

When asked yesterday about the possible deal, Merrimack Valley Hospital CEO Michael Collins said, "I have no comment at this time."

If a sale does happen, it would be the second time in a decade that Haverhill's hospital was sold.

The hospital was built in 1984 as the city-owned Hale Hospital. Facing the possibility of having to close the hospital because of financial losses, Haverhill sold it in September 2001 to Essent Healthcare of Nashville, Tenn.

After the sale, the city kept the original hospital debt, which now amounts to more than $90 million. Haverhill is committed to paying $7 million per year to pay off that obligation until 2023.

Caritas Christi, which is being acquired by Cerberus Capital Management, a New York investment firm, is reportedly interested in buying another Essent-owned facility in northeastern Massachusetts, Nashoba Valley Medical Center in Ayer.

"There have been discussions" between Essent and Caritas Christi, Nashoba CEO Steven Roach said.

He said, however, he could not confirm whether the talks were about Caritas buying the hospital he runs.

The conversations between the two hospital chains have been going on "above my head," he said.

People who work at high levels in the health care industry told The Eagle-Tribune it should not be surprising that one facility might be talking to another one about acquisition.

Both Marc Bard, managing director of Navigant Consulting of Boston, and James Kirkpatrick, senior vice president of health care finance for the Massachusetts Hospital Association, said the health care law Congress passed in March reduced the amount of money going to hospitals.

Bard, who serves clients across the country, said a "wave of consolidations" always happens when a major change happens in health care.

Bard has done work for Caritas and said the chain's mission is to provide "accessible, affordable, quality health care" to people "in and around your neighborhood." Chris Murphy, spokesman for Caritas, would not comment on whether his company wants to buy Merrimack Valley Hospital, but said the firm wants to offer people a full range of services in their communities.

Among other benefits, he said, a full range of services would result in fewer trips to Boston for residents to receive medical care.

Both Murphy and Bard said hospitals face escalating costs. Noting the phenomenon of rising costs and dropping revenue — lower Medicaid and Medicare payments — "nobody should be surprised that everybody is talking to everybody," Bard said.

Assuming that Caritas' purchase of Merrimack Valley Hospital "would be a bad thing is a huge mistake," he said.

Kirkpatrick noted Mass Health, the health insurance provider for lower-income people, pays "70 cents on the dollar." In the meantime, hospitals need to upgrade equipment so they're looking for "opportunities to meet capital needs," he said.

"These are tough times for Massachusetts hospitals," Kirkpatrick said.

Caritas is a chain of six Catholic hospitals in eastern Massachusetts: Holy Family Hospital in Methuen, St. Elizabeth's Medical Center in Brighton, Carney Hospital in Dorchester, Norwood Hospital, Good Samaritan Medical Center in Brockton, and St. Anne's Hospital in Fall River.

Before it can take effect, the deal between Caritas and Cerberus must be approved by both the state Department of Public Health and the Supreme Judicial Court.

 

FPO