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President’s exit stirs fears on hospital’s fate

The Boston Globe/File 2011

Bill Walczak said he did not resign as president of Carney Hospital, as the hospital said.

Dorchester community leaders are worried about the future of Carney Hospital after last week’s abrupt departure - some say firing - of its president, Bill Walczak, a longtime neighborhood activist hired by Carney’s new corporate owner only 14 months ago.

Walczak took issue with a spokesman for Steward Health Care System, the parent company of Carney, who said Friday that Walczak had quit.

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“I did not resign from the Carney Hospital,’’ Walczak said Wednesday. He declined to elaborate on the circumstances behind his leaving the 186-bed hospital, which has been losing money for years amid cuts in government insurance payments for lowincome patients.

Walczak, a onetime union organizer who founded and ran the nonprofit Codman Square Health Center in Dorchester for more than three decades, was recruited early last year to head Carney. But many who knew Walczak through his community work thought he did not fit in with Steward, a for-profit company formed by the New York private equity firm that in 2010 acquired Carney and five other Catholic hospitals in the former Caritas Christi Health Care system. Walczak and Steward executives clashed over their visions for Carney, they said.

Last week, Steward reaffirmed an earlier promise to maintain Carney as a “world-class community resource for the citizens of Dorchester.’’ But decades of on-and-off talk of closing financially strained Carney and the sudden loss of Walczak - who helped lead a campaign to keep the hospital open during a threat to shut its doors in 2008 - have reignited old fears.

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People in the neighborhood hope “that the commitment Steward made to Carney will continue,’’ said James W. Hunt Jr., chief executive of the Massachusetts League of Community Health Centers, who sits on the hospital’s board. “It’s a new ownership team, and we’re all measuring it.’’

“If you put it out there that you’re a profit-making organization, everything is bottom line, bottom line,’’ said Kwame A. Mark Freeman, visiting professor at the University of Massachusetts Boston. “It’s not surprising that Bill, given his passion for community rights and health care rights, ran up against some friction from this organization.’’

In a memo to the company’s board, medical staff, and employees Friday, Steward’s chief operating officer, Josh Putter, wrote that “Bill Walczak and Steward have decided to part ways.’’ That same day, Steward spokesman Chris Murphy told the Globe that Walczak had resigned. On Wednesday, Murphy said, “The decision for Bill to leave Carney was a mutual one.’’

But several of Walczak’s friends and associates say he was fired after proposing a three-year strategic plan calling for Steward to make new investments in Carney.

“Bill wanted to invest in the Dorchester community and the community health centers, while Steward just wanted to make money,’’ said Stephen J. Weymouth, a Boston lawyer and president of the Codman Square Health Center board of directors. He said Walczak pressed Steward to open an obstetrics and gynecology program that could offer services to neighborhood health centers. “Money has to be spent to make money on occasion.’’

Murphy reiterated that Steward remains committed to Carney, which was founded in 1863. He said the Boston parent company has invested $18 million in capital improvements at the Dorchester hospital over the past year and a half, including $14 million to renovate its operating rooms and post-acute care units. “Given the facts,’’ Murphy said, “I don’t think anyone can question our commitment to Carney. There will be more investments by Steward into Carney.’’

He also cited the “massive financial subsidies we give the hospital to cover their operating deficit.’’ Murphy said thedeficit widened during Walczak’s tenure, to $20 million in 2011. He added that Carney is the only Steward hospital losing primary care doctors.

Dr. Richard Marquis, who is affiliated with rival Beth Israel Deaconess Hospital-Milton, said he and five other physicians left Carney last year only because Steward terminated their contracts after they refused to sign new employment deals.

On the question of Walczak’s strategic plan, Murphy said Steward does not employ such a model for individual hospitals. “The strategic plan for the entire Steward system is an integrated model,’’ he said. “You don’t look at each hospital in isolation.’’

Steward has appointed registered nurse Margy Hanson, who previously ran the system’s Norwood Hospital, to lead Carney temporarily while it searches for a permanent leader.

Walczak, who made his reputation in health care by establishing the Codman Square Health Center as a model neighborhood health program, faced multiple challenges at Carney. Shortly after becoming president, he dismissed 29 nurses and mental health counselors, following complaints of abuse or neglect in the adolescent psychiatry unit.

Carney also eliminated 24 nursing jobs and 10 service employee jobs late last year, according to hospital union representatives. Murphy would not confirm the numbers, but acknowledged Steward has had “minor reductions in staffing’’ at Carney, at St. Elizabeth’s Medical Center in Brighton and, last week, at Saint Anne’s Hospital in Fall River. Unlike other Boston hospital groups, Steward does not specify the number of jobs it cuts.

Weymouth said Walczak had broached plans for Carney to provide more services to Codman Square Health Center, which is also affiliated with Boston Medical Center, and potentially work together to develop the Odwin building on Dorchester Avenue across from Ashmont Station. But some neighborhood health center officials had been skeptical of forging deeper ties with Carney and its corporate parent, he said.

“There were several of us who didn’t want to hurt Bill, but didn’t quite trust the Steward people,’’ Weymouth said. “If Steward thought they were going to get the cooperation of the neighborhood health centers, they made a big mistake by firing Bill.’’

As a “safety net’’ hospital with a majority of its patients covered by Medicaid and Medicare - the government health insurance programs for low-income and older residents - Carney has struggled for survival sinceat least as far back as the 1950s. There have been several threats to shutter the hospital, most recently by executives at Steward’s predecessor, Caritas Christi, who told labor representatives in September 2010 they would have to close Carney and St. Elizabeth’s if they could not complete the proposed agreement to sell Caritas to Cerberus Capital Management, the private equity firm that created Steward.

Attorney General Martha Coakley, who recommended that Steward be allowed to convert the Caritas hospitals from nonprofit to for-profit properties, attached conditions that included a commitment by the buyer not to close any of the hospitals for three years under any circumstances. That “no close’’ promise was extended at least two more years unless a particular hospital has lost money for two consecutive years, monitors have completed an 18-month review, and the hospital has given regulators a six-month shutdown notice.

Melissa Karpinsky, a spokeswoman for Coakley’s office, said officials there continue to keep a watch on Steward’s operations at Carney. She said the office has not released any public reports on its findings.

Robert Weisman can be reached at weisman@globe.com.
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