August 20, 2012

Mercy Hospital may be sold to Mass. chain

By Jessica Hall
Staff Writer

PORTLAND — Mercy Health System of Maine may be sold to a Massachusetts hospital chain, which would become the first for-profit company to own a Maine hospital.

Today's poll: Mercy Hospital sale

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Mercy Health System of Maine’s locations include Mercy Hospital’s Fore River Parkway site, shown in the photo above.

Carl D. Walsh/Staff Photographer

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Patients sit in the waiting room at the new Mercy primary care clinic on Route 1 in Yarmouth.

Gabe Souza / Staff Photographer

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Terms of Mercy's potential deal with Steward Health Care System LLC were not disclosed Monday. Mercy, which has 800 doctors and treats thousands of people every year at multiple facilities in southern Maine, said it intends to remain a Catholic institution.

Mercy has signed a letter of intent to negotiate the sale to Steward, which could take six months to complete. Steward intends to retain Mercy's management team and 1,700 employees.

"This is very big news for Maine. It would be the first for-profit hospital in the state," said Jeff Austin, a spokesman for the Maine Hospital Association.

Mercy Health System has two hospitals in Portland, nine primary care facilities in Greater Portland and a medical staff of more than 800.

It is part of Catholic Health East, a health system in 11 states from Maine to Florida.

Steward Health Care System operates 10 community hospitals with 2,700 physicians in Massachusetts, including six Catholic hospitals.

Mercy Health System started a strategic review about a year ago, considering the weak economy and pending health care reform. It picked Steward among numerous suitors because of its financial resources, its values and its willingness to allow Mercy to maintain its Catholic affiliation, said President and Chief Executive Officer Eileen Skinner.

"This was a proactive choice. We decided to do this, we didn't have to do this. We're hoping to do some really successful things together," Skinner said.

Skinner, who earned more than $527,000 in 2010, said Mercy's Catholic mission doesn't conflict with the notion of a for-profit hospital.

"It's a for-profit entity that provides health care. There are good for-profits and bad for-profits, just as there are good nonprofits and bad nonprofits. This is really about intent, not tax status," Skinner said. "The things that are essential -- our mission, our charity care, treating all patients with dignity -- will not change.

"The Catholic identity won't change. We're not going to do anything we don't do today," Skinner said.

Steward is owned by Cerberus Capital Management, a private equity firm named for the mythological three-headed dog that guarded the gates of Hades. Cerberus bought Steward, then known as Caritas Christi Health Care, in 2010 for $830 million.

Steward's deal with Mercy would be the latest in a spate of acquisitions of hospitals by private equity firms.

Bain Capital, co-founded by presumptive Republican presidential nominee Mitt Romney, and others bought HCA in 2006. HCA now owns 163 hospitals nationwide. The success of that deal sparked a wave of buyouts; there have been 35 acquisitions of hospitals or health care chains by private equity firms in the last 2½ years, according to The New York Times.

Although Mercy said its mission won't change, some health care advocates were cautious Monday.

"This would be going from a system that doesn't add a profit margin to one that does -- that's a change," said Mitchell Stein, policy director with Consumers for Affordable Health Care, a Maine-based nonprofit advocacy organization. "We have to make sure this doesn't impact patient services."

Mary Bertell of Westbrook, a mammogram technologist on Mercy Hospital's Fore River campus, said she and co-workers were told about the sale agreement during a staff meeting Monday morning and assured that it would not lead to layoffs or other changes.

(Continued on page 2)

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Steward Health Care System LLC, a Massachusetts hospital chain, has signed a letter of intent to purchase Mercy Hospital, shown on Monday.

Carl D. Walsh / Staff Photographer


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Today's poll: Mercy Hospital sale

Do you think Mercy Hospital would benefit from being sold to a chain that would make it Maine’s first for-profit hospital?



View Results