Northeast in merger talks with 4 firms

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January 20, 2011

Northeast in merger talks with 4 firms

By Francis X. Quinn Staff Writer The Gloucester Daily Times Thu Jan 20, 2011, 11:23 PM EST

Northeast Health System, the parent company of Gloucester's Addison Gilbert Hospital, has been talking in recent months about a potential affiliation with four other health care organizations, Northeast President and Chief Executive Officer Ken Hanover said Thursday, with a decision on whether to proceed expected later this year.

Hanover listed Lahey Clinic, Beth Israel Deaconess, Vanguard Health Systems and Steward Health Care System as the groups with whom Northeast has talked.

"We are at the early stages of discussing various alternative relationships with various other health care organizations," Hanover said in a Thursday telephone interview with the Times. "We've had preliminary discussions with those four."

Hanover said the talks were aimed at exploring the desirability of a strategic or primary alliance.

He said Northeast trustees had made no decision about a specific would-be partner, and that it would be prudent to examine ways to maintain stability in a fast-changing time within the health care industry.

Currently, he added, Northeast continues to be a "very vibrant, financially sound organization."

At the same time, health care reforms on the state level in 2006 and on the federal level last year are bringing "significant changes in the way care is accessed and provided," Hanover said.

In addition to Addison Gilbert, Northeast Health System includes Beverly Hospital and BayRidge Hospital in Lynn. Other Northeast facilities include Beverly Hospital at Danvers; Medical and Day Surgery Center, Danvers; CAB Health & Recovery Services Inc. at 16 sites, including on Cape Ann; Health & Education Service Inc. at 38 sites, including on Cape Ann; the Herrick House in Beverly; Ledgewood Rehabilitation and Nursing Center in Beverly; and Seacoast Nursing and Rehabilitation Center in Gloucester.

Meanwhile, expressing fears for Addison Gilbert's future, a group known as Partners for Addison Gilbert Hospital has scheduled community meetings in Rockport and Gloucester next Tuesday to "review what's really happening at the hospital and Northeast, and make plans together on how this community must and will protect our hospital and all the services needed there."

Organizer Peg O'Malley she hopes those attending can include Hanover, state Sen. Bruce E. Tarr, R-Gloucester, and state Rep. Ann-Margaret Ferrante, D-Gloucester.

"This is the time for us all to be really active in the fight for AGH," said O'Malley, a Gloucester resident, longtime registered nurse and Addison Gilbert activist.

"Northeast is actively seeking a merger or sale to another health system," O'Malley wrote in an e-mail to the Times.

"Layoffs of nurses and elimination of other essential staff positions are taking place at AGH and Beverly," she wrote. "We cannot allow Northeast to compromise the standard of care at AGH or for AGH and our lives to be reduced to bargaining chips among mega-corporations."

The sessions being sponsored by the advocacy group supporting full services at Addison Gilbert are to be held Jan. 25 from 3 to 5 p.m. at the Rockport police station and from 6:30 to 8:30 p.m. at American Legion Hall in Gloucester.

In a telephone interview Thursday, O'Malley said community concerns are not based on hard information. But summarizing speculation that has heightened anxiety, she said that, in recent months, "we have heard increasing reports that Northeast Health System is engaged in actively seeking a merger or being acquired by another health system."

Late last year, Cynthia Cafasso Donaldson, vice president for ancillary services at Northeast Health System and the public face for the Gloucester hospital, said Addison Gilbert remains on solid ground and was moving forward into 2011.

Donaldson's comments came four months after Hanover told Gloucester city councilors that Northeast had eliminated seven full-time jobs at Addison Gilbert Hospital and might close two outpatient programs as part of the health care system's $15 million cost-cutting plan.

The job cuts in Gloucester were described as part of an ongoing round of 100 layoffs throughout the hospital chain as the parent company adjusted to falling revenues and a rapidly evolving national health care system.

Subsequently, the Gloucester hospital's Cardiac Rehabilitation Maintenance program became the first of potentially two outpatient services to be eliminated.

To date, however, the hospital has not dropped the second program that Hanover had projected, though Donaldson said last month that doesn't necessarily mean a second cut isn't pending.

Donaldson has emphasized that essential core services provided by the hospital will remain strong.

Hanover reiterated Thursday that services at the Gloucester hospital haven't changed, but that the service mix at all facilities is regularly reviewed.

Northeast acquired Addison Gilbert in a 1994 merger. Its merger/sale to Beverly Hospital included Addison Gilbert surrendering a roughly $30 million endowment and a significant art collection.

The Partners for Addison Gilbert Hospital organization dates to that time.

O'Malley said the upcoming community sessions would enable people with "bits of information" to compare notes.

Last May, Hanover offered some reassurance to Addison Gilbert advocates.

During a forum in May at the Rockport Public Library, Hanover told an audience, "I've said it in Gloucester and will say it again — you have my commitment that we will provide those eight services," referring to the eight minimum services that must be available in a hospital to be an emergency services provider. The essential services include adequate operating room facilities immediately available for life-threatening situations.

O'Malley said Thursday those comments in Rockport had been "really helpful" but that hospital proponents would like the same assurances in writing.

Francis X. Quinn can be reached at 978-283-7000 x3455 or fquinn@gloucestertimes.com.