Mass Attorney General Calls for St. Elizabeth's to Become Community Hospital

Massachusetts Attorney General Martha Coakley released a report yesterday making series of recommendations related to governance, management, and organization to help the Caritas Christi Health Care System (CCHCS) to "address the challenges it faces and achieve stability." The Attorney General's study was done by an outside group, the Health Strategies & Solutions, Inc. (HSS).

The Caritas system as a whole has been plagued by financial problems, including a very low operating margin of 0.8% (compared with 3% for a "healthy" non-profit) and continued losses in the Caritas Physician Network (expected to be $15 million in 2008, down from $30 million in 2007). It has been without a permanent replacement for its chief executive officer for nearly two years.

St. Elizabeth's Medical Center in Brighton Center is part of the Caritas system, and operates as a teaching hospital affiliated with Tufts Medical School. The Boston Globe noted that St. Elizabeth's "is among the worst-performing hospitals in the Boston area, according to statistics compiled by the state Division of Health Care Finance and Policy."

The Attorney General's report makes a series of recommendations that, if fully implemented, could change the nature of the services provided by St. Elizabeth's. Some of the report's recommendations, from the Attorney General's press release and the viewgraphs accompanying it, are:

• Diocesan leadership should relinquish control over strategic, operational, and financial matters to the independent Board of Governors. Diocesan leadership should retain influence only over matters of religious direction.
• St. Elizabeth’s Medical Center in Brighton should continue its realignment as a community teaching hospital, with a concentration on two or three major service lines:
• CCHCS leadership perceives one opportunity to be in the area of cardiovascular services.
• Caritas St. Elizabeth’s should focus on its core service area, for the most part competing with local hospitals for patients.
• HS&S understands that CCHCS has initiated a process to develop a contemporary strategic plan for Caritas St. Elizabeth’s.
  
• The previous CCHCS administration developed a “System Forward” strategy which identified Caritas St. Elizabeth’s as the tertiary/quaternary referral center hub of CCHCS. Current CCHCS management understands that this is not a practical strategy.
• Caritas St. Elizabeth’s has insufficient resources and capabilities to compete successfully for a wide range of tertiary care services in the highly competitive Greater Boston marketplace.
• Caritas St. Elizabeth’s should function as a community teaching hospital, with continued emphasis (and development of advanced capabilities) in two to three major service lines where it can be competitive.
• CCHCS has initiated a process to develop a contemporary strategic plan for Caritas St. Elizabeth’s.
• Financial losses resulting from employment of or contractual arrangements with physicians should be addressed as a top priority.
  
• Failure to successfully address these issues in a timely manner will result in deterioration of CCHCS’ competitive and financial positions.
  

According to the HHS presentation, having St. Elizabeth's operate as a tertiary care services facility appears not to have worked because: (1) St. Elizabeth's is "not clinically prepared or capable" of being a tertiary center; and (2) doctors from other hospitals in the system were not making referrals to St. Elizabeth's due both to the geographical distance between Caritas hospitals.

The Archdiocese of Boston owns the Caritas system. It has been looking to sell it for several years, but has limited the search to buyers who would maintain the religious foundation of the system. One buyer, Ascension Health of St. Louis, backed out of an agreement to purchase the system after disclosure that the physicians group had overstated its revenue by $10 million. A subsequent sale attempt to Catholic Health Initiatives of Denver also fell through.

The recommendation for the Archdiocese to relinquish governing control over the system is the top priority, according to a letter written by the Attorney General:

The most compelling priority confronting Caritas is the need for the Archdiocese of Boston to relinquish direct and indirect control over strategic, operational, and financial matters of Caritas while retaining influence only over matters of religious direction. Operating a hospital system is an extraordinarily complicated business, a recognition that has led virtually all religious organizations throughout the nation to transfer control to lay boards while in most cases maintaining a commitment to the religious principles upon which the systems were founded. Indeed, last year, the Archdiocese approached three different national organizations about potentially assuming control of Caritas -- all are lay organizations that adhere to and promote the religious principles of the Catholic faith.

It is in the best interests of Caritas that the Archdiocese transfer total control of the business of the system to an independent Board of Governors, which should have the sole authority to choose Board members and the chief executive, and to run Caritas in the manner it deems appropriate with no outside influence except on matters of religious direction.

Governance has been a recent problem for the Caritas system. Its chief executive officer, Dr. Robert Haddad, stepped down in 2006 due to allegations of sexual harassment. Caritas has been unable to fill that position ever since, resulting in a lack of top leadership during a time of challenging finances and competition.

St. Elizabeth's is currently undergoing a major construction project to expand and modernize its emergency department with a new building at the intersection of Washington Street and Cambridge Street. A new access road, which would start from near the intersection of Washington Street and Monastery Road, appears to be on hold since it was disclosed last summer that the archeological excavation would be required at the site. The access road also would pass close to St. Gabriel's Monastery, which is classified as a Local Landmark and is on the State Register of Historic Places.

Here's a link to the Boston Globe story about the Attorney General's Report in Friday's paper.