The parent company of South Shore Hospital said Wednesday that a merger with another health care network is among the options likely on the table as it begins the second phase of a strategic review.
Rose Di Pietro, interim chief executive of South Shore Health, said in an e-mail to employees that the nonprofit health system has hired investment bank Cain Brothers to “help sharpen our focus on exploring opportunities for future direction.”
The move is the next step in a review that begin in January with an eye toward how to adapt to changes in the health care industry. That effort was slowed by the onset of the coronavirus pandemic.
In an interview, Di Pietro said South Shore Health has “no preconceived notions” on what steps it may take as a result of the review being done with Cain Brothers, which focuses on health care, but she didn’t rule out the possibility of a merger with another organization.
“No decisions have been made,” Di Pietro said. “This is about how to best position us for long-term success.”
Consolidation has reshaped the hospital landscape in Massachusetts and across the country as providers seek the muscle to negotiate payment rates with insurers and lure doctors. Mass General Brigham, formerly known as Partners HealthCare, has put together a network of 12 hospitals, while Beth Israel Lahey Health has 13.
Like other health systems, South Shore Health was hammered financially by the pandemic, which forced the cancellation of nonemergency care. Its operating margin, which measures profitability from primary activities, was negative 21.5 percent in April before recovering to positive 6.5 percent in May, according to state data. The blow was cushioned by $33 million in COVID-19 government relief funds.
Even before the coronavirus, community hospitals such as South Shore Hospital, which is in South Weymouth, have said they find it hard to compete on their own, and several have joined Mass General Brigham or Beth Israel Lahey. Others have closed, leaving the state with about 60 hospitals, down from 140 in 1960, according to Alan Sager, a professor at Boston University’s School of Public Health.
Sager said consolidation among hospitals has failed to drive down health care costs in Massachusetts. “They do what’s good for themselves, not what’s good for us,” he said.
South Shore Hospital had planned to become part of Partners, but the deal was dropped in 2015 after opposition from competitors and state Attorney General Maura Healey.
South Shore Health also held merger talks with Wellforce, the parent of Tufts Medical Center, but negotiations ended following the resignation in October of Dr. Gene E. Green, who was then South Shore Health’s CEO. Green had pushed for the deal and was interested in taking over as chief executive at Wellforce, people familiar with the matter told the Globe last year.
Di Pietro, who had spent 38 years at the hospital before retiring in 2018, came back to serve as interim CEO.
Despite the previous negotiations with Mass General Brigham and Wellforce, South Shore Health hasn’t spoken with either about its strategic review, Di Pietro said.
“We’ve not been negotiating with anyone behind the scenes,” she said.
The 395-bed South Shore Hospital is part of a system that also includes a physicians group, home health and hospice care, urgent care clinics, and other services. Di Pietro said the organization is “solvent and strong,” with the strategic review being driven in part to determine the best ways to “keep care local for services that you don’t need to go to an academic hospital for.”
She said South Shore Health would like to expand mental health and mobile health services, and recruit more primary care doctors.
“We are going to need someone to partner with on these,” she said.
But that doesn’t necessarily mean merging with another organization. Di Pietro noted the company already has clinical affiliations with Dana-Farber for cancer care, as well as Boston Children’s Hospital and Brigham and Women’s Hospital. It may seek more partnerships like those.
Di Pietro she said she is committed to staying on with South Shore Health until a decision is made on Cain Brothers’ recommendations, which should be in the late fall or early winter.
“I’m committed to getting us to a launch-off point,” she said.
Meanwhile, a search is under way for a permanent CEO.