Rash of Catholic sales-and lost busi­ness op­por­tu­ni­ties-prompt largest Catholic sys­tem to act

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Catholic hos­pi­tals care for one of ev­ery six in­pa­tients in the U.S., but mount­ing fi­nan­cial pres­sures are forc­ing many of them into deals that may feel like Faus­tian bar­gains that pit their Catholic iden­ti­ties against their abil­ity to sur­vive. Pri­vate-equity firms and sec­u­lar health sys­tems have shown a keen in­ter­est in buy­ing up Catholic hos­pi­tals to keep their doors open, but the trend has raised con­cerns that the Catholic so­cial mis­sion can­not square with sec­u­lar own­ers’ in­ter­est in prof­its.

Now a new for-profit joint ven­ture be­tween Catholic gi­ant As­cen­sion Health and pri­va­tee­quity firm Oak Hill Cap­i­tal Part­ners in­tends to of­fer a new op­tion: own­er­ship by a for­profit Catholic health­care sys­tem.

As­cen­sion and Oak Hill are form­ing a jointly owned, in­de­pen­dent health sys­tem called As­cen­sion Health Care Net­work, which will spe­cial­ize in ac­quir­ing Catholic hos­pi­tals that need cap­i­tal but don’t want to com­pro­mise their long-stand­ing Catholic iden­ti­ties to get it. The hos­pi­tals will con­tinue to com­ply with Catholic re­li­gious ethics, and the lo­cal bish­ops will re­tain all the con­trol over the hos­pi­tals that they have to­day.

Al­though Catholic hos­pi­tals face the same fi­nan­cial and op­er­a­tional chal­lenges as other not-for-prof­its in to­day’s health­care mar­ket, As­cen­sion lead­ers and oth­ers be­lieve Catholic hos­pi­tals stand to lose more when they run into the arms of a buyer: namely, their longheld iden­ti­ties.

“Our fear is, 10 years from now we may look back and say: What hap­pened to all of the Catholic hos­pi­tals and sys­tems?” said An­thony Ter­signi, pres­i­dent and CEO of 76hos­pi­tal As­cen­sion Health, based in St. Louis.

But could the cre­ation of en­ti­ties such as As­cen­sion Health Care Net­work ac­tu­ally ac­cel­er­ate the de­cline of Catholic hos­pi­tals?

Kath­leen Boozang, a law pro­fes­sor at Se­ton Hall Univer­sity, said it’s not clear that the sur­viv­ing en­ti­ties will be Catholic, or that they would stay that way for long.

“It goes to the heart of what Catholic health­care is: Can a for-profit en­ter­prise that is owned by a pri­vate-equity firm pur­sue and live the min­istry of Je­sus in pro­vid­ing health- care?” said Boozang, who was not fa­mil­iar with the As­cen­sion joint ven­ture be­cause it was not yet pub­lic.

Sim­ply fol­low­ing the eth­i­cal and re­li­gious di­rec­tives pro­mul­gated by the U.S. Con­fer­ence of Catholic Bish­ops does not suf­fi­ciently de­fine what a Catholic hos­pi­tal is, Boozang said. “His­tor­i­cally, the em­pir­i­cal ev­i­dence sug­gests that for-profit com­pa­nies are very nim­ble at get­ting out of com­mu­ni­ties that are stressed, and they elim­i­nate ser­vices that are un­prof­itable.”

How­ever, Mon­signor Peter Beaulieu said the no­tion of a for-profit Catholic hos­pi­tal is not nec­es­sar­ily an oxy­moron. He has worked as a Catholic pri­est and ethics ad­viser for 14 years at 321-bed St. Vin­cent Hos­pi­tal, one of the nation’s long­est-run­ning Catholic hos­pi­tals run by for-profit com­pa­nies. The Worces­ter, Mass., hos­pi­tal is owned by Van­guard Health Sys­tems.

“I’m sure they don’t make money on ma­ter­nity ser­vices, or very lit­tle … but we wouldn’t let them drop that ser­vice,” Beaulieu said. “The bishop has moral and spir­i­tual au­thor­ity in the op­er­a­tion of the hos­pi­tal.”

Ter­signi said As­cen­sion Health Care Net­work will be a new en­tity, and he was con­fi­dent it would pass muster with Catholic authorities.

“It’s fair to say that this is the first Catholic equity-based sys­tem in the coun­try. We’re chart­ing un­charted waters,” Ter­signi said. “We be­lieve this is a model that will not only pre­serve Catholic iden­tity, but … the rights of the lo­cal bishop.”

The an­nounce­ment comes on the heels of a raft of merger deals be­tween sec­u­lar and Catholic hos­pi­tals. The big­gest was the $895 mil­lion trans­ac­tion last Novem­ber that re­sulted in six-hos­pi­tal Car­i­tas Christi Health Care—once owned by the Arch­dio­cese of Bos­ton—be­com­ing New Eng­land’s largest for-profit provider.

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