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In Caritas sale, Coakley should learn more about CEO’s terms

WHILE MANY questions linger about the future of Massachusetts’ health care system, one thing is certain: Ralph de la Torre is poised to play an increasingly important role in it. If de la Torre continues to build upon his successes as the president and CEO of Caritas Christi Health Care, the second-largest health care system in New England, Massachusetts might be better off. But before Attorney General Martha Coakley stamps her approval on a deal in which de la Torre arranged for Caritas to be purchased by the private-equity firm Cerberus, more should be known about the terms of his compensation.

De la Torre has cast himself as defender of Caritas’s traditional mission and values, and his considerable prestige has helped speed the deal through the regulatory process. In the absence of a clear business plan from Cerberus, de la Torre’s assurances are a major source of public confidence. It is therefore necessary to know on what grounds the CEO be compensated — which might shed light on Cerberus’ priorities. In similar deals in the past, the CEO’s compensation has remained private. But that doesn’t take into account the unusual centrality of de la Torre’s role in Cerberus’ takeover of Caritas.

The 44-year-old de la Torre has a stunning resume with dual degrees from Harvard Medical School and the Massachusetts Institute of Technology, and impressive stints as a health care entrepreneur, consultant, and the youngest-ever chief of cardiac surgery at Beth Israel Deaconess Medical Center.

Since taking the reins at Caritas in 2008, de la Torre has also proven himself to be a charismatic and visionary chief executive. In his first year alone, he took the hospital chain from $20.5 million in losses to an operating income of $30.5 million.

Now, he is in the process of converting Caritas from a chain of six nonprofit Eastern Massachusetts hospitals into a for-profit juggernaut. While the state is reviewing the terms of the Cerberus deal, de la Torre is already making moves to acquire other in-state hospitals and one in Rhode Island.

There is no reason to believe de la Torre plans to stop there. If he succeeds in building a nationwide health care operation based out of Massachusetts, de la Torre will not only amass significant control of the state’s health care system, but he will also be in a position to seize opportunities created through national health care reform.

De la Torre has thus far shown himself to be a trustworthy operator; he has no ethical red flags on his record. Even so, Cerberus should explain what type of compensation it plans on providing de la Torre if its acquisition of Caritas is approved. As Caritas CEO in 2009, de la Torre made more than $1.3 million; although he has said that the terms of his contract will not be negotiated until the state rules on the sale, it is reasonable to expect that he stands to get a significant raise if the deal goes through. Will the incentives Cerberus provides encourage de la Torre to focus primarily on profits or maintaining services — even the poorly paying ones — at all of his hospitals?

With so much to gain financially, de la Torre isn’t in a position to advocate objectively for the state’s patients. As part of her review process, Coakley should press Cerberus to make public the terms of de la Torre’s employment. With that knowledge, Massachusetts will be in a better position to judge the actions of its new health care power broker.