Caritas Christi could go it alone, says Carney head

For the second time this year, a potential buyer of the Caritas Christi Health Care chain that owns Carney Hospital has decided not to pursue the deal. Denver-based Catholic Health Initiatives halted its merger talks with Caritas officials last month.

Caritas is still open to such a merger, said Caritas Carney Hospital president Daniel O'Leary, but it is still profitable and should not be counted out on a go-it-alone strategy.

"We're pursuing a two-part strategy," said O'Leary. "One is, finally, after a long delay, hiring a strong leader. We're not in as bad a shape as the Globe portrayed, but we have lost time. [The other is], I think there's still a good possibility for us to interest another chain. I think it would be good for health care. One doesn't preclude the other, but the clear strategy is to go it alone."

So far, the plan does not include former Attorney General Thomas F. Reilly lobbying for higher reimbursement rates from insurance companies by qualifying the chain as "distressed," as was speculated in the Boston Globe. Reilly was hired to straighten out a more specific technical issue concerning pharmacy reimbursement rates with Blue Cross Blue Shield, said O'Leary.

Additionally, the chain does expect to turn a profit this year, said O'Leary, although not quite as much as the $22.4 million Caritas earned in 2006. The $2.1 million loss in operational revenue reported by Standard & Poor's for the eight months ending May 31, he said, were probably due to the departure of some specialists earlier in the year, the lack of a strong leader, and the overall distraction of the merger negotiations. The same Standard & Poor's rating reported a $4.4 million profit for the same period, but warned that Caritas Christi would need to report earnings similar to previous years to "return to a stable outlook."

"The physical plant is old and definitely needs refurbishing, but we have invested in technology. We have a catheter lab, an MRI, a PET [a scanner that can view metabolic activity]. This is what people mean when they say modern technology," said O'Leary, adding that some specialists have now been replaced and Caritas is in the process of hiring more.

The Carney is the poorest performing hospital in the Caritas chain, money-wise, because around 75 percent of its payments come from Medicaid, free care and other government sources, said O'Leary. At the other side of the profitability spectrum in Caritas Christi St. Anne's Hospital in Fall River, Good Samaritan Medical Center in Brockton and Caritas Norwood Hospital, all of which compare well with competitors' facilities. Caritas Norwood's profit of $8.2 million in 2006, according to Standard & Poor's, accounted for over a third of the chain's profit for that year.

One reason for Carney's fiscal troubles could be what Codman Square Health Center director Bill Walczak calls our "irrational" health care system.

"The Carney Hospital should play a role in a rational health care system that we clearly don't have," said Walczak. "If we had a rational health care system, the teaching hospitals would be used for certain admissions and community hospitals would be used for other types of services. Many services currently costing a lot of money could be delivered by community hospitals for a lot less money. Merely walking into a teaching hospital adds thousands of dollars to the price of care. Eventually, our state will figure out how to allocate healthcare, and when it does, the Carney will need to be there. That alone should be sufficient for people to rally around the idea of keeping the Carney in business."O'Leary is critical of current health care market dynamics as well.

"As long as the health care system pays significantly different rates based on market clout, Caritas is disadvantaged, and that's how it is now," said O'Leary. "The system rewards expensive centralized care. It's just illogical."

Hospital pricing was deregulated in Massachusetts in 1991, and private insurance companies can now pay wildly differing rates to different hospitals for the same services, often depending upon the hospital's ability to gain leverage and negotiate a better deal.

A recent study by the Service Employees and Industrial Union 1199, headquartered in Dorchester, revealed that different rates are even being paid by the state out of the uncompensated care pool for emergency room visits. Generally, government rates are standardized across the board. In Fiscal Years 2003 to 2005, a neck sprain cost the state an average of $407.22 at Beth Israel-Deaconess Medical Center for an uninsured Dorchester resident, and $618.37 at Mass General Hospital, but only cost the state $236.81 at Caritas Carney.

Another facet of the Carney's money woes could be Dorchester's Catholic community's gradual migration to the suburbs in recent decades, agreed O'Leary.

"Absolutely, that's been a concern," said O'Leary. "If we were in a wealthy suburb I have no doubt that we'd be making money. But we've reached out into other groups. Vietnamese- and Haitian-Americans have Catholic communities."

"Carney is looking toward the South Shore for patients," said Ed Grimes, director of Upham's Corner Health Center. "But the publicity Dorchester gets is so negative that people are in fear of their life to come in to Dorchester. That makes it an uphill climb for Carney."

Other observers pointed to the Carney's disconnection with local health centers and the referrals they could provide. The hospital founded the Mattapan, Bowdoin Street, Neponset and Codman Square health centers prior to entering the Caritas Christi chain, but later could not afford to support them. Caritas' main competitors, Partners Health Care (Brigham and Women's, Mass General) and CareGroup (Beth Israel Deaconess), have extensive clinic networks.

The hospital's long-standing Catholic denomination, which limits choice by not providing birth control or abortion procedures, might also hurt the number of referrals given Dorchester's changing demographics.

The Roman Catholic Archdiocese of Boston, which owns the chain, is mum on almost anything related to Caritas Christi's current predicament. When called, Archdiocese spokesperson Terrence Donilon referred via e-mail to a three-week old press release that announced Caritas' renewed search for a CEO, and would not comment further. In June, similar talks with Ascension Health, the country's largest Catholic hospital chain, also failed to produce a deal.

Negative publicity for the chain could be a mixed blessing for the local community. Patients can get appointments quicker at the Carney than other hospitals, said O'Leary, particularly with cardiologists, oncologists and G.I. doctors.

"I think we're valuable to the community, but the community also has to support us. We have some very good doctors available and we can assign someone immediately."