Wednesday, December 4, 2013
By Leslie Bridgers firstname.lastname@example.org
The same private equity firm that bought Windham-based Bushmaster Firearms in 2006 -- and Chrysler a year later -- is trying to add Mercy Health System to its Massachusetts-based chain of for-profit medical centers.
Steward Health Care System LLC, a subsidiary of Cerberus Capital Management of New York, owns 10 community hospitals, including six Catholic hospitals that comprised Caritas Christi Health Care, a chain once owned by the Archdiocese of Boston.
Cerberus formed Steward in 2010 for the purpose of buying Caritas Christi, and has added four Massachusetts hospitals to the chain since then. None of those hospitals had a religious affiliation.
Caritas Christi was drowning in debt when Dr. Ralph de la Torre was hired in 2008 as its chief executive officer, said Steward spokesman Christopher Murphy.
He said de la Torre, who had been chief of cardiac surgery at Beth Israel Deaconess Medical Center in Boston, took the company through a $50 million financial turnaround -- from losing $20 million in 2008 to generating $30 million in 2009.
Since purchasing Caritas Christi, Boston-based Steward has infused $600 million into the hospitals and more than doubled the number of doctors who work for the company, from 1,200 to 2,700, Murphy said.
Some of Steward's rapid growth was a result of bringing on a group of 150 physicians who had been affiliated with Beth Israel and, later, 90 more doctors linked to its chief in-state rival, Partners HealthCare, according to reports by the Boston Globe.
Steward came under scrutiny for some of the incentives it used to recruit doctors. Last year, Beth Israel's lawyers questioned whether the terms were so rich that they amounted to illegal kickbacks, according to the Globe.
A spokesman for Steward said at the time that its contract was legal, the newspaper said.
Steward's hospitals are "very attractive to physicians who want to stay and work in the local community" and have high-quality equipment and amenities, Murphy said Monday.
He said Steward intends to maintain, and in some cases expand, the charitable care and community involvement offered by the nonprofit hospitals it buys.
While private equity firms typically hold their investments for three to five years before selling them, Mercy President and Chief Executive Officer Eileen Skinner said Cerberus has a longer investment window.
"Private equity groups have very different investment horizons. Cerberus looks longer-term than some," Skinner said.
She declined to speculate on the fate of Mercy and Steward if Cerberus decided to sell.
As for-profit entities, the hospitals give back to their communities in the form of tax dollars. Most of the $80 million Steward paid in taxes last year was property taxes, Murphy said.
He said the company is the third-largest employer in Massachusetts, with more than 17,000 workers.
New England Sinai Hospital in Massachusetts and Landmark Medical Center in Rhode Island are joining Steward, Murphy said.
Cerberus also owns the NewPage paper mill in Rumford. NewPage Corp. filed for Chapter 11 bankruptcy protection last year.
Staff Writer Leslie Bridgers can be contacted at 791-6364 or at:
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