As­cen­sion’s for-profit model called work­able for Catholic hos­pi­tals

Modern Healthcare - - Front Page - Joe Carl­son

As­cen­sion Health may have raised eye­brows in the Catholic health­care world last week by form­ing a new for-profit health sys­tem, but in­dus­try ex­perts say they hardly ex­pect that to be the last such mar­riage be­tween re­li­gious health­care and profit-minded fi­nanciers.

As­cen­sion, by far the nation’s largest not­for-profit non­fed­eral health­care sys­tem by rev­enue, an­nounced last week that it is part­ner­ing with pri­vate equity firm Oak Hill Cap­i­tal Part­ners, of Menlo Park, Calif., to form a new en­tity called As­cen­sion Health Care Net­work (Feb. 21, p. 6).

The new for-profit sys­tem will lever­age Oak Hill’s pri­vate equity, along with an undis­closed in­vest­ment by As­cen­sion, to buy up ail­ing Catholic hos­pi­tals. The sys­tem will use As­cen­sion’s op­er­a­tional and mis­sion ex­per­tise to en­sure the fa­cil­i­ties re­main au­then­ti­cally Ro­man Catholic—even while they pro­duce div­i­dends for Oak Hill’s in­vestors.

It’s an idea that would have been an­ti­thet­i­cal the late Chicago Car­di­nal Joseph Bernardin, a na­tion­ally in­flu­en­tial critic of profit-seek­ing Catholic health­care who used his seat as a trustee on the Catholic Health As­so­ci­a­tion to speak out vo­cif­er­ously dur­ing the wave of Catholic health­care con­sol­i­da­tions in the mid-1990s.

Bernardin died in 1996. “He was a bril­liant man, but times have changed. It has got­ten very tough to be­come a suc­cess­ful op­er­a­tor of an acute-care in­sti­tu­tion in this day and age,” said Lawrence Singer, di­rec­tor of the Bea­z­ley In­sti­tute for Health Law and Pol­icy at the Je­suit Catholic Loy­ola Univer­sity Chicago.

John Haas, the long­time pres­i­dent of the Na­tional Catholic Bioethics Cen­ter in Philadel­phia, said the for­ma­tion of As­cen­sion Health Care Net­work is likely to prompt some concern.

“I think the news will be re­ceived with un­easi­ness by many,” Haas said by e-mail while trav­el­ing in Rome. “There is a deeply in­grained sen­ti­ment, if not stud­ied con­vic­tion, that health­care must be pro­vided for the ben­e­fit of the pa­tient and not for the en­rich­ment of in­vestors or share­hold­ers.”

How­ever, both Haas and Singer said they be­lieve the As­cen­sion Health Care Net­work model can be work­able, given strong enough con­trac­tual pro­tec­tions and vig­i­lant over­sight by Catholic of­fi­cials.

Whether other large Catholic sys­tems plan to fol­low suit re­mains to be seen. Spokes­peo­ple for each of the other nine sys­tems in the top 10 largest Catholic health sys­tems in the coun­try ei­ther de­clined to com­ment or did not re­turn calls for com­ment. Of­fi­cials with the Catholic Health As­so­ci­a­tion also de­clined to com­ment.

Leo Brideau, pres­i­dent and CEO of As­cen­sion Health Care Net­work, said in a writ­ten state­ment this week that re­ac­tion to the news has been pos­i­tive: “Many col­leagues and health sys­tem CEOs have told me this type of ini­tia­tive is long over­due.”

Given the se­vere need for cap­i­tal at many Catholic hos­pi­tals, the ven­ture is bound to be watched closely, not just by hos­pi­tals but com­peti­tors as well.

Jeff At­wood, a spokesman for the pri­va­tee­quity backed hos­pi­tal-ac­qui­si­tion firm Re­gion­alCare Hos­pi­tal Part­ners, called the for­ma­tion of As­cen­sion Health Care Net­work “a sign of the times.”

“We all know ac­cess to cap­i­tal is be­com­ing so im­por­tant as it re­lates to health­care, and these new types of ar­range­ments and struc­tures are part of the fab­ric of what we’ll see,” he said, adding that it wasn’t yet clear whether Re­gion­alCare and As­cen­sion Health Care Net­work would com­pete to ac­quire the same hos­pi­tals.

For-profit Van­guard Health Sys­tems, which owns one Catholic hos­pi­tal in Worces­ter, Mass., and last year an­nounced plans to buy three more in Chicago, de­clined to com­ment on As­cen­sion’s new ven­ture.

The Rev. Wil­liam Gro­gan, who serves as Chicago Car­di­nal Fran­cis Ge­orge’s del­e­gate to hos­pi­tals and chairs the Chicago Arch­dio­cese’s Bioethics Com­mit­tee, noted that a sud­den in­fu­sion of cap­i­tal into a Catholic hos­pi­tal could neg­a­tively af­fect com­pet­ing not-for-profit hos­pi­tals within the same mar­ket. In the­ory, that could hurt the other Catholic hos­pi­tals’ abil­ity to pro­vide needed com­mu­nity ser­vices, he said.

Gro­gan said that con­cep­tu­ally, for-profit re­li­gious health­care could be a work­able model, but a ma­jor ques­tion will be whether the prof­its made by such sys­tems end up eat­ing into the funds that would other­wise go to pro­vid­ing com­mu­nity ben­e­fits.

He urged in­vestors in Catholic sys­tems to con­sider the fact that lo­cal bish­ops are likely to re­move the Catholic iden­ti­ties of hos­pi­tals if they’re seen as stray­ing from Catholic so­cial teach­ing.

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