BOSTON, MASS. – March 25, 2010 – Caritas Christi Health Care (“CCHC”) today announced that it has signed an agreement to be acquired by Steward Healthcare System LLC, a newly formed affiliate of Cerberus Capital Management, L.P. (“Cerberus”). This agreement marks the successful completion by CCHC of an extensive process to identify, evaluate and select a capital investor to complete its turnaround and position the system for future growth. Under the terms of the acquisition, CCHC will continue to be managed by its current Massachusetts-based executive team, including President and CEO Ralph de la Torre, MD. The agreement also stipulates that the six Caritas Christi hospitals will retain their Catholic identities, and their existing policies on charitable and pastoral care, community benefits, and approach to labor relations from a social justice perspective. The transaction is subject to customary closing conditions, including approvals from the Massachusetts Attorney General and the Massachusetts Department of Public Health, as well as the approval of the Archbishop of Boston.
The transaction will provide the Caritas health care system with approximately $830 million of capital support, including the assumption of all pension obligations for current and former Caritas employees, the repayment of virtually all of the system’s outstanding debt, a significant capital investment to fund operations, and a commitment to approximately $400 million of capital projects, including six major construction projects that will provide immediate upgrades to each of the Caritas Christi hospitals.
“Caritas Christi has a clear vision for the future of the system and is committed to offering world-class medical care and employment opportunities in the communities we serve. We are committed to creating an integrated community-based Accountable Care Organization,” said Dr. de la Torre. “We are striving to further improve the quality of care our patients receive, attract talented new physicians, upgrade and expand the infrastructure at our facilities, maintain or grow our staffing levels and undertake additional investments to further improve the quality of care we provide. In Cerberus, we found an investor that shares our vision and commitment.”
“Cerberus is pleased to be making a long-term investment that will help ensure the viability and future success of the Caritas Christi health care system,” said W. Brett Ingersoll, Co-Head of Private Equity at Cerberus. “Caritas’ leadership and its 13,000 dedicated employees have done an outstanding job of stabilizing operations over the past few years in a very challenging economic environment. Caritas is the region’s largest community hospital network, and our investment will give physicians, nurses and other health professionals the additional tools they need to deliver world-class care to patients in the communities where they live.”
In addition to the financial benefits outlined above, the purchase agreement contains a number of substantial non-financial commitments to Caritas, including that the system will:
- Remain headquartered in the Greater Boston area;
- Keep current management in place;
- Maintain employment levels, and compensation and benefits arrangements;
- Continue to run the Caritas Christi hospitals as Catholic health care providers in accord with the Ethical and Religious Directives for Catholic Health Care Services adopted by the United States Conference of Catholic Bishops;
- Maintain existing policies on community benefits as well as charitable and pastoral care;
- Maintain medical residency and teaching programs; and
- Respect the commitments that Caritas has made to charitable donors to the system.
“The Archdiocese of Boston is grateful to Caritas Christi Healthcare for all it has done to continue the healing ministry of Jesus Christ. We are encouraged that this agreement between Caritas and Cerberus Capital will enhance the quality of care at Caritas and continue to uphold Catholic teachings and morals. We are grateful to Dr. Ralph de la Torre and his leadership team for the strong foundation they have built at Caritas Christi, which has made this agreement possible,” said Very Reverend Richard M. Erikson, Vicar General and Moderator of the Curia of the Archdiocese of Boston.
He continued, “Cerberus’ planned investment in the Caritas hospitals will provide needed resources to serve patients with excellent quality and compassionate care long into the future. We look forward to the establishment of a Stewardship Agreement, whereby the Archbishop of Boston will assure Caritas continues to be guided by Catholic teaching, morals and the Ethical and Religious Directives.”
The acquisition and the conversion of CCHC to a taxable entity, upon approval, are expected to generate significant state and local tax revenues. The process for obtaining the necessary approvals will begin immediately.