(NECN: Peter Howe, Brockton/New Bedford, Mass.) An $830 million private-equity deal to take over six eastern Massachusetts Roman Catholic hospitals cleared a key hurdle Wednesday when Massachusetts Attorney General Martha Coakley issued a ruling she deal is "in the public interest."
Cerberus Capital Management LLP sees the opportunity to create what some call the health-care equivalent of a Southwest Airlines -- a financial strong, lower-cost competitor for expensive Harvard-affiliated hospital systems around Boston that now dominate the local health-care landscape. It's agreed to step up with promises to protect the 12,000 jobs at the six hospitals, bolster pensions for 13,000 retirees, and pump $400 million into construction and capital upgrades like new emergency rooms and other facilities.
It's a deal that has strong support from Service Employees International Union Local 1199, which represents 3,000 workers at four of the hospitals. "This is a real win-win situation for our community, our hospital, for the employees here,'' said Christine Gainey, a medical lab technician and 1199 leader who has worked for 42 years at Good Samaritan Medical Center in Brockton and its forbears, known as "Good Sam" to everyone in the area. "We are absolutely thrilled with this agreement, totally thrilled. Our pensions are going to be guaranteed now. We know that ... We're also going to be able to invest in more technology so that we can offer the best possible care for the community.''
After a 5-month review that included adding some new conditions to Cerberus's takeover bid, Coakley said she is satisfied the deal is a fair one. "We don't want those hospitals to close. They're too important to the communities they serve.''
Besides Good Samaritan, Caritas includes Holy Family in Methuen, St. Elizabeth's in Brighton, Carney Hospital in Dorchester, Norwood Hospital, and Fall River's St. Anne's.
In a statement, Caritas spokesman Christopher Murphy said, "We appreciate the thorough and diligent review and attention the Attorney General and her staff have given to this transaction. This transaction is essential to the survival of Caritas Christi and our individual hospitals and will protect the pension of 13,000 pensioners, the economic security of 12,000 employees and the continued access to community health care for one million patients.
In addition to the $400 million in planned upgrades, Cerberus promised to Coakley it will make no cuts in charity care and agree to limits on any sale or closing of the hospitals. Specifically, under the Coakley agreement, Cerberus won't be allowed to close or sell any of the six Caritas hospitals for three years, and in years four and five, they can only sell or close a hospital if it is failing to meet a specific set of financial-performance measures.
The Caritas deal still needs basically pro-forma approvals from the Supreme Judicial Court and state Public Health Council, but getting Coakley's blessing was widely seen as by far the biggest hurdle for Cerberus to clear.
Coakley said she sees this deal as not just saving six hospitals that have been struggling financially, but -- done right -- creating a lower-cost challenger to the expensive Partners HealthCare and other Harvard-affiliated hospitals.
"I think this new system, with infusion of capital, with good management, is really going to be an important player,'' Coakley said. "I believe they will strengthen the entire health care landscape. They will be able to now compete.''
With videographer Mike Bellwin
