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Only a few years ago, things were looking up for the Catholic Medical Center. The hospital, in the former mill town of Manchester, N.H., had survived the worst of the pandemic and a new chief executive officer was focused on the future. Plans were moving ahead to merge with the state’s only academic medical center. C.M.C.’s cardiac care center was regularly voted among the best in the state. And federal grants were helping the hospital invest in its future.
But things took a turn.
State authorities effectively quashed the potential merger in 2022, saying it would violate the New Hampshire state constitution’s requirement for “free and fair competition.” Following that, a series of investigative articles uncovered abnormally high rates of malpractice settlements from one of the hospital’s star heart surgeons. And in April, the hospital announced that continued “financial stress” meant that it would lay off dozens of employees and eliminate some open positions, equating to a reduction of about 140 full-time positions.
C.M.C. leaders say the hospital needs a new way forward if it is to remain sustainable. They announced a new plan last fall, saying that they plan to sell the hospital to a large, for-profit health system, HCA Healthcare, which is a publicly traded company based in Nashville, Tenn., that operates nearly 200 hospitals in 26 states and the United Kingdom. Critics say the move could put the hospital’s historic mission at risk by putting profit over patients, but the hospital’s leaders say the plan offers C.M.C. a lifeline and a chance to secure a healthy financial future.
Catholic Medical Center traces its roots all the way back to the late 1800s. But like many other modern hospitals, its current incarnation is already the result of a merger. The Sisters of Mercy created what was then called Sacred Heart Hospital in Manchester in 1892, and two years later, the Sisters of Charity of St. Hyacinthe, along with a local parish, opened Notre Dame Hospital. In an effort “to combine resources and medical services,” according to C.M.C.’s website, the two hospitals merged in 1974, with the hope of strengthening the local church’s ability “to provide patient care in the spirit of Christ.”
Alex Walker, the president and chief executive officer of C.M.C., said in a press release last September that the proposed sale of the hospital is in line with the spirit of its founders: “In addition to embracing our Catholic mission, HCA Healthcare also aligns with our core values and is committed to healthcare excellence, community service, and investing in our people and facilities.”
But the proposed sale faces regulatory hurdles. New Hampshire’s attorney general, John Formella, told New Hampshire Public Radio in October that the proposal “merit[s] a lot of close scrutiny,” particularly around maintaining services and patient affordability. HCA owns other hospitals in New Hampshire, and the company has come under fire after claims it does not adequately staff its hospitals. It also has been criticized for shutting down a labor and delivery unit just two years after buying a hospital and promising to keep it open for at least five years.
If the sale is approved, it would be the latest in a string of formerly nonprofit Catholic hospitals being bought by for-profit companies or private equity firms. These arrangements have been praised by several Catholic hospital leaders as a way for struggling institutions to access much-needed capital. But a formerly nonprofit hospital taking on a for-profit business structure raises questions. Can hospitals originally founded to provide for the health care needs of the poor remain true to their mission if they become part of a corporation whose loyalty is to investors and shareholders?
No Clear Church Teaching
Several Catholic health care experts interviewed for this article said the church offers no prescribed answers when it comes to church-affiliated hospitals joining for-profit companies. That is partly because such a distinction more clearly falls under the jurisdiction of the Internal Revenue Service than that of the U.S. Conference of Catholic Bishops. The U.S. tax code offers large tax breaks to charitable organizations, including Catholic and other nonprofit hospitals. When a hospital transitions to a for-profit model, it gives up those tax breaks. But while Catholic teaching may not have much to say about the way the I.R.S. classifies hospitals, leaders in Catholic health care have robustly debated the issue for years.
Seton Hall University hosted a conference in 2012 about the possibility of Catholic hospitals being sold to for-profit companies and whether the mission of those hospitals would be affected by such a sale. In the executive report from the proceedings, the conference hosts noted that several participants decried the possibility that a for-profit hospital that is “Catholic by contract” could be “reduced to mere adherence” to the Ethical and Religious Directives, a set of guidelines for Catholic health care adopted by the U.S. Conference of Catholic Bishops, which would amount to “a moral minimalism.”
But not everyone agreed. Leo P. Brideau, who has headed several Catholic hospital systems, said at the conference that “‘for-profit’ describes our tax status; it doesn’t describe our purpose.” That purpose, he said, “is continuing the healing ministry of Jesus.”
That same year, Health Progress, a journal affiliated with the Catholic Health Association, published an article by Kelly A. Carroll, a lawyer and health care ethicist, that asked, “Can For-Profit Catholic Health Care Get the Mission Right?” Ms. Carroll cited a number of Catholic health care ethicists who had argued that for a hospital to retain its true Catholic identity, it must continue to be a nonprofit enterprise. But Ms. Carroll concluded otherwise, arguing that “a for-profit, Catholic-owned health care entity that mindfully embraces the distinctive Catholic identity will retain most of the nonprofit characteristics closely aligned with, and perhaps integral to, the meaningful provision of the good of health care.”
Church teaching doesn’t prohibit Catholic-aligned organizations from operating with a profit-driven structure. The hymnal publisher G.I.A., for example, is a family-owned, for-profit company, and the popular prayer app Hallow includes on its website an article explaining why it chose not to incorporate as a nonprofit organization. But those are different from institutions created by religious orders or dioceses to carry out ministries, argued Michael Rozier, S.J., chair of the health management and policy department at Saint Louis University. Father Rozier said it would be inappropriate for a religious order to establish a ministry and operate under a for-profit structure.
Whether an existing nonprofit Catholic ministry, such as a hospital, can be sold to a for-profit company and still be considered a Catholic ministry is a different question, he said. While Father Rozier has doubts about how well a for-profit system can live out a Catholic mission, the fact that dozens of Catholic hospitals have already joined for-profit systems, often with the support of bishops, suggests that at least as far as church authorities are concerned, it is a possibility.
What happens when a formerly nonprofit Catholic hospital joins a for-profit system? Often, the buyers promise to uphold the Catholic identity of the institution and negotiate with the religious order or diocese about what that looks like. Sometimes it means provisions related to funding pastoral care and chaplaincy departments or even offering daily Mass in a hospital chapel. At a minimum, these arrangements almost always ensure that the new owners will abide by the E.R.D.s. These can be expansive but often boil down to what kinds of procedures Catholic hospitals will not perform, such as abortions. Last year, the U.S. bishops approved a process aimed at reforming the guidelines, in part because of increased calls for hospitals to perform procedures related to gender identity, which the church generally opposes. But Catholic health care ethicists interviewed for this story said the fact that a for-profit hospital pledges to follow the E.R.D.s does not necessarily mean that the hospital is truly living out its Catholic mission.
Father Rozier said that following the E.R.D.s is a minimum, but for a health care ministry to be considered authentically Catholic, it should also live out the Gospel in its culture and have “a meaningful connection to the institutional church.”
But analyzing the culture of an institution can be difficult.
“In Catholic ministries, we have a commitment to prayerful discernment about how to make decisions,” he said. “When you’re owned by a for-profit company and subject to their strategic decision making, you aren’t doing prayer-based discernment because that’s not part of the culture of the organization.”
When asked if a for-profit hospital or health care system can truly be considered Catholic, M. Therese Lysaught, a professor of health care ethics at Loyola University Chicago’s Neiswanger Institute for Bioethics and Health Care Leadership, put it plainly: “The answer is no.”
The Poor Versus Profit
But Catholic hospitals are not immune from wider market forces. Nearly all Catholic hospitals in the United States were founded by religious orders, partly to offer care for poor immigrants who could not otherwise access care. In the earliest days of their existence, members of those religious orders often staffed the wards, thus cutting down on labor costs. Savings were often passed on to the patients.
This model worked for generations, but as the number of available women religious dwindled, and as advances in health care sent costs skyrocketing, it became financially untenable. This initially meant a wave of mergers and consolidations, creating large Catholic health care systems. And in some instances, formerly independent Catholic hospitals were sold to for-profit systems.
Today, the three largest for-profit systems in the United States—HCA Healthcare, Tenet Healthcare and Community Health Systems, which together own about 8 percent of U.S. hospital beds—all include in their portfolios hospitals that were once Catholic nonprofits.
Dr. Lysaught, who is also a member of the Vatican’s Pontifical Academy for Life, said the original mission of Catholic hospitals, including their focus on caring for the poor, stands at odds with the goals of for-profit health care systems.
“When [for-profit] organizations take over Catholic institutions, the Catholic mission is pretty much done,” Dr. Lysaught said.
The Catholic Church teaches that accessing health care is “a fundamental right of every human being.” That means that a patient’s ability to pay should not determine whether she or he is able to see a doctor and receive treatment when facing an illness. Critics of for-profit hospitals say that when profit becomes the prime motivation, the quality of services suffers; and, often, for-profit systems close hospitals serving low-income communities.
Several examples seem to back up those criticisms.
A judge in 2013 ruled that HCA failed to follow an agreement it had made to improve several hospitals it purchased in the Kansas City area, ordering the company to pay $162 million to a foundation charged with making sure the improvements were made.
Citing unsafe working conditions, nurses at St. Vincent’s Hospital in Worcester, Mass., went on a prolonged strike in 2021, saying that the for-profit owner of the hospital, Tenet Healthcare, was not investing in the formerly nonprofit Catholic hospital.
The leader of an HCA-owed hospital in Florida lost her job last year after several physicians complained that the hospital’s focus on profits led to unsafe conditions for patients.
And in North Carolina, the attorney general is suing HCA, claiming the company “degraded” the local nonprofit system it purchased by failing to offer adequate care. “HCA apparently cares more about its profits than its patients,” said Attorney General Josh Stein.
HCA did not reply to an interview request for this story, but representatives have denied to other news outlets any accusations of wrongdoing in each of those instances.
There is no definitive answer to how the health outcomes of patients change when a nonprofit hospital switches to a for-profit mode. But recent studies suggest low-income patients have a more difficult time obtaining care, and another study found that the rate of serious medical complications in patients increases.
This does not mean that a hospital’s nonprofit status insulates it from criticism when it comes to patient access to quality, affordable health care.
In exchange for tax exemption, nonprofit hospitals are required to invest in their local communities, which includes offering charity care to patients who cannot afford to pay their medical bills. Catholic hospitals pride themselves on the charity care they offer, especially in otherwise underserved areas. But some studies suggest that both for-profit and nonprofit hospitals provide a similarly small amount of charity care.
Last October, Senator Bernie Sanders, an independent from Vermont, released a report skewering nonprofit hospitals for “failing to live up to their end of the non-profit bargain,” citing the relatively low levels of charity care covered by hospitals in relation to executive compensation.
The head of the Catholic Health Association took issue with that assessment. “While Catholic non-profit hospitals provide free and discounted services and make billions of dollars in investments toward community benefit,” wrote Mary Haddad, R.S.M., “others in the healthcare delivery chain [hoard] profits without any expectation they will invest in caring for unserved or underserved patients.”
Sister Haddad continued, “We are committed to a healthcare future that delivers affordable access to care and better health outcomes for patients—and that commitment includes treating patients, regardless of who they are or their ability to pay, and delivering on our mission to prevent patients from going unserved.”
A Cautionary Tale?
The phenomenon of private equity and for-profit systems targeting struggling Catholic hospitals as they seek to expand their market share goes back decades.
Senator Rick Scott, a Republican from Florida, was chief executive officer of HCA in 1997. Called “the most controversial hospital executive in America,” Mr. Scott approached church leaders in the Archdiocese of Chicago and told them that HCA could offer cash and stability for its 20 Catholic hospitals.
The Rev. Michael Place, who was then the archdiocese’s health care advisor, declined the offer.
“In one sense, a deli is a deli is a deli,” Father Place recounted to The Chicago Tribune. “But when you walk into a Jewish deli, you know you’re not in a Greek deli. A hospital defined by its religious ministry is different that way: It’s intangible but real. There is no way we will sell the soul of the deli.”
But beginning in the early 2010s, hospital mergers and consolidations seemed to increase at a rapid pace, and Catholic hospitals no longer were positioned to decline such offers.
The sale of Catholic hospitals in Massachusetts to a private-equity group in 2010 offers perhaps the clearest warning of what can happen when profit seems to take precedence over mission.
Caritas Christi Health was a system of six Catholic hospitals in eastern Massachusetts. The hospitals, which served mostly low-income patients, faced crushing debt and needed cash if they were to stage any kind of turnaround. Dr. Ralph de la Torre, a respected Boston heart surgeon, was hired by the archdiocese in 2008 to take control of the nonprofit system. He said at the time that the debt was too great and required a buyer who could help restructure the finances and reinvest in the facilities. Two years later, Dr. de la Torre structured a deal to sell the hospitals to Cerberus Capital Management.
Some Catholics criticized the sale at the time, fearful that the sale would threaten the Catholic identity of the hospitals. But neither the archdiocese nor state officials wanted to risk the closure of the hospitals, and the deal was approved.
In the years that followed, a series of controversial real estate transactions extracted wealth from the hospitals and made Cerberus and Dr. de la Torre huge profits. The New York-based private equity company sold its stake in the former Caritas system in 2020 to Steward Health Care, which Dr. de la Torre runs as its chairman and chief executive officer. Reports show that Cerberus made about $800 million in the sale, more than four times its original investment in the hospitals. Dr. de la Torre’s company paid itself a $100 million dividend. It was around that time, The Boston Globe recently reported, that Dr. de la Torre purchased a yacht estimated to be worth $40 million.
Last year, Steward announced that its eight hospitals in Massachusetts, most of which were previously Catholic hospitals, faced insolvency. A series of investigative articles published in The Boston Globe reported that the hospitals are understaffed and under-resourced, with patients at risk and the hospitals facing the possibility of being closed. Both state and federal officials have announced investigations into Steward. Federal officials are also investigating the impact of private equity on health care systems, with some calling for greater regulation to limit private equity’s intrusion into the sector.
Dr. de la Torre has defended his company’s management of its Massachusetts hospitals, telling The Boston Globe that while he “can appreciate why people are quick to make this criticism,” he also believes “there are important facts to consider”—namely, that no one else stepped up to save the struggling hospitals.
Steward, meanwhile, announced on May 7 that it would seek bankruptcy protection. But the company said it would keep operating its Massachusetts hospitals, and state officials said they would hold Steward to that pledge.
A Positive For-Profit Partnership
The Caritas Christi/Cerberus/Steward debacle is an extreme example of a formerly Catholic system falling victim to corporate greed. But other Catholic leaders say that partnering with for-profit companies has offered salvation.
Elizabeth Worley, S.S.J., said she remains confident that a Catholic hospital joining HCA is able to maintain its Catholic identity—because she has seen it firsthand.
Miami’s only Catholic hospital, founded by the Sisters of St. Joseph of St. Augustine in 1950, encountered rough financial terrain in the early 2000s. It tried unsuccessfully to merge with a local Baptist system before completing a sale to HCA in 2011.
Representing the Sisters of Saint Joseph during the sale, Sister Worley helped create a covenant agreement with HCA that carved out provisions aimed at maintaining the hospital’s Catholic identity.
The agreement signed between the hospital’s representatives and HCA ensures that the hospital will maintain a pastoral care department, that a chapel will be open inside the hospital, offering daily Masses in English and Spanish, and that the staff will operate in “full compliance” with the Ethical and Religious Directives, Sister Worley said. Additionally, the hospital’s board of directors reserves seats for some sisters, whose religious order remains the canonical sponsor of the hospital. The hospital agreed to continue providing charity care and other community benefits for a number of years, as required for nonprofit hospitals by federal law, though the final agreement did not stipulate that charity care would remain permanent.
The sale to HCA, Sister Worley said, “allowed Mercy Hospital to continue its operations to be successful, to be Catholic in the fullness of its identity, to continue to train leadership in Catholic health care, to maintain its Catholic identity, which was recognized by the local archbishop, [and] to maintain Catholic ministry to our patients.”
While the sisters continue to offer formation opportunities for lay employees at the hospital, the day will come in the not-too-distant future when it is likely that those charged with running the hospital will never have had contact with any Sisters of St. Joseph, or even any meaningful connection to the church.
Can that kind of culture be considered Catholic?
“We’re on ground that nobody’s walked on,” Sister Worley said. “So we’re working on it.”
Supporting the Sale
Back in New Hampshire, last September the credit rating firm Moody’s downgraded Catholic Medical Center’s rating, saying that the hospital’s “weak operating performance has driven cash declines and reduced financial flexibility.”
“The strategy of remaining a standalone, independent Catholic hospital in Manchester, New Hampshire, long term, is probably not a winning strategy,” Mr. Walker, the president and chief executive of C.M.C., said in an interview last year with New Hampshire Public Radio.
A few weeks later, C.M.C. announced it would seek to become part of HCA Healthcare. C.M.C. did not make a representative available for an interview. Instead, representatives pointed to a press release in which Mr. Walker said, “We have been on a journey to identify a partner that will, first and foremost, support our mission of health, healing and hope, as well as a partner who will embrace who we are as a Catholic hospital.”
The sale of the hospital to HCA would include provisions that “maintain C.M.C.’s Catholic identity,” establish a nonprofit foundation aimed at contributing to the local community, and “enhance the immediate and long-term financial viability” of the hospital, the hospital said in a press release.
The head of HCA New England Healthcare said in a statement to New Hampshire Public Radio that the company had “great admiration for C.M.C.’s long history of caring for the Manchester community.”
“We believe this partnership will not only preserve C.M.C.’s decades-long commitment to providing high-quality care in the Catholic tradition, it would also ensure that we can meet the growing demand for quality care here in New Hampshire for years to come,” said Dean Carucci.
C.M.C. and other struggling Catholic hospitals are in an unenviable space. Without investment, it is very difficult for independent hospitals to survive in the current health care landscape. Even wealthy nonprofit systems may face staggering financial losses in the coming years. That means that for some, selling to a for-profit system might appear to be the most attractive option.
Even so, like other Catholic health care ethicists, Father Rozier remains skeptical.
He said the first option for a Catholic hospital seeking a partnership should be an attempt to join an existing Catholic system.
And if that is not possible?
“Then you basically say that we as a church have done everything that we can do here,” Father Rozier said, “and we can no longer fulfill the need that exists.”
That might mean selling the hospital to a for-profit system but without the intention of trying to keep the institution Catholic.
But in New Hampshire, there seems to be a desire to press on. The proposed C.M.C. deal has the backing of New Hampshire’s Catholic bishop, Peter A. Libasci, who frames the sale as one that could bolster Catholic health care in the state for decades to come.
“Unwavering adherence to Catholic moral and ethical principles, and actual practice, in the delivery of health care is a foremost priority for me,” Bishop Libasci said in the press release. “The parties engaged in this endeavor are fully immersed in the process to provide an authentic reflection of the Catholic identity and excellent care that has been provided to the community over the past 131 years.”
