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-2509 RE: Caritas Christi/Cerberus Proposed Transaction Dear Attorney General Coakley: We are writing to express our serious concerns with the rapidly moving process for government approval regarding the proposed purchase of the non-profit Caritas Christi Health Care System (Caritas) by Steward Healthcare System LLC (Steward), a subsidiary of the Wall Street private equity firm Cerberus Capital Management (Cerberus). While we understand the desire of the proponents to move this sale forward quickly, we urge you to conduct this review in a deliberate, transparent, and inclusive manner. As you are aware, this proposed conversion is unprecedented in the Commonwealth. This complex transaction involves the state’s second largest hospital chain and tenth leading employer. The sale could impact access to vital services in many communities and has far-reaching implications for the future of the state’s healthcare system. News reports detail Cerberus’ interest in purchasing as many as six additional hospitals to add to their network. Given the stakes for the Commonwealth and its citizens, we are concerned about the rush to approve such a complicated transaction. Community-based groups have articulated a set of issues and concerns that they would like addressed to protect and enhance the health care services that these community hospitals provide. Other transactions involving the sale and conversion of single non-profit to for-profit hospitals, both in Massachusetts and in other states, have been evaluated and approved on a much more extended timeframe. We urge you to make sure this approval process provides all stakeholders with the time and opportunity to have a dialogue with the proponents of the deal and government officials about the deal’s impacts. We also ask you to make public for review the information, data, and analysis that your office and hired consultants have compiled over the past three months; to require Steward to provide a detailed business plan and how it will spend its proposed $400+ million of capital investment for public comment and analysis; and, to provide the public a forum to provide feedback with this new information.
The six community hearings held in rapid fire succession in June and July of this year provided limited opportunities for true engagement between the community and the proponents. These hearings were held even though Steward still has not submitted 60 of 64 appendices referenced in its Transaction Summary and Asset Purchase Agreement and the findings from the independent review undertaken by the AG remain unavailable to the public. It should be acknowledged that Steward/Cerberus’ ownership of the Caritas network brings with it many risks. As a private equity fund, Cerberus’ bottom line obligation is to its investors, not to the Commonwealth, or to the patients in the communities served by the Caritas system. Cerberus, like many other private equity funds, has a track record of saddling acquisitions with debt while extracting significant returns for itself and investors. Cerberus’ history is marked by abandonment of poorly performing companies without regard for community impact. In this case, Cerberus is entering an industry where it has no experience, and is placing itself in a fragile situation where the consequences of failure and abandonment could be life threatening. Cerberus’ need to produce investment returns raises real concerns about the potential for its financial success to come at a great cost to Massachusetts’ healthcare system. The proposed sale would remove the Caritas hospitals from public ownership, potentially impacting access to essential health services for our state’s poorest residents while having far reaching implications for the future of Massachusetts’ healthcare system. We urge the Attorney General to make available to the public the Cerberus financial and business plan, the remaining appendices, and the information that your office has gathered over the past three months. Patients, community organizations, and Massachusetts taxpayers have the right not just to be heard quickly, but to have the time and access to materials to fully engage in the public comment process. We look forward to speaking with you. Please contact Matt Wilson at Health Care For All at 617-275-2940 or firstname.lastname@example.org. Sincerely, Amy Whitcomb Slemmer, Executive Director Health Care For All Health Access Coalition Lawrence General Hospital Signature Healthcare Brockton Hospital Southcoast Hospital Group Matt Selig, Executive Director Health Law Advocates
Dan Driscoll, Chief Executive Officer Harbor Health Services Rob Restuccia, Executive Director Community Catalyst Representative David Torrisi Representative Steven D’Amico Senator Susan Tucker Senator Patricia Jehlen Allan Rodgers, Executive Director The Massachusetts Law Reform Institute Al Norman, Executive Director Mass Home Care Association Laurie Martinelli, Executive Director NAMI Mass Sheldon H. Barr, President and Chief Executive Officer Health Imperatives Sheila Casey, Executive Director Neighborhood Legal Services, Lynn/Lawrence Carol Trust, Executive Director National Association of Social Workers (NASW-MA Chapter) Juliana Langille, Executive Director Community Connections of Brockton Lucinda Williams Dorchester House Governing Board Elizabeth Saville, President Brockton Interfaith Community Glen Ohlund, Director Self Help Community Development Corporation Greater Brockton CHNA Steering Committee Karen Hall, Director Stoughton Youth Commission
David Spackman, Division Chief Non-Profits/Public Charities Division