Caritas Christi Healthcare of Boston has signed an agreement to be acquired by Steward Healthcare System, a newly formed affiliate of New York City-based Cerberus Capital Management.
The transaction will provide $830 million of capital support to the Caritas healthcare system, 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 capital investment to fund operations and a commitment to approximately $400 million of capital projects, according to Caritas. The provider added that the $400 million of capital projects will include six construction projects that will provide upgrades to each of the Caritas Christi hospitals.
According to Caritas, the acquisition and the conversion of the health system to a taxable entity, upon approval, are expected to generate significant state and local tax revenues.
Caritas said it will continue to be managed by its current Mass.-based executive team, including President and CEO Ralph de la Torre, MD, under the terms of the acquisition. The agreement also stipulated 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, Caritas noted.
According to the provider, the non-financial commitments include that it will:
- Remain headquartered in the greater Boston area;
- Maintain employment levels, as well as compensation and benefits arrangements;
- Continue to run the Caritas Christi hospitals as Catholic healthcare providers in accord with the Ethical and Religious Directives for Catholic Healthcare Services adopted by the U.S. Conference of Catholic Bishops;
- Maintain medical residency and teaching programs; and
- Respect the commitments that Caritas has made to charitable donors to the system.
The process for obtaining the necessary approvals will begin immediately, according to Caritas.