Boston Children’s plans to acquire Franciscan Children’s, boost mental health care

The deal to acquire Francisan Children's would be the first of its kind for Boston Children’s Hospital, which has acquired doctors groups and built new facilities in the past but has never acquired another hospital.Lane Turner/Globe Staff

Boston Children’s Hospital, the region’s dominant pediatric health care provider, said Tuesday that it plans to acquire Franciscan Children’s in Brighton as part of a strategy to boost mental health services for young patients.

The deal would fold Franciscan Children’s into Boston Children’s, giving the larger hospital more power in the local health care market, and hospital officials said it would allow them to better respond to children in mental health crises awaiting psychiatric treatment.

The COVID-19 pandemic has exacerbated the shortage of psychiatric treatment facilities and staff, particularly for children with mental health needs. The demand is so high that many children wait days or even weeks before receiving treatment.

At Boston Children’s last week, 80 patients were receiving or waiting for inpatient psychiatric care — more than twice the peak level of psychiatric patients at the hospital before the pandemic.

“We are in a crisis with kids with behavioral and mental health issues,” said Dr. Kevin Churchwell, chief executive of Boston Children’s. “Both institutions were working to try to solve it. In our discussions, we both realized that we could do more together than separate.”

Together, Boston Children’s and Franciscan Children’s plan to add inpatient and outpatient services for children with psychiatric disorders and developmental disorders. One focus, Churchwell said, would be more treatment options for children with autism.

“These kids, when there’s no real opportunity for care, they come to emergency departments. They come to EDs that aren’t equipped to care for these kids,” Churchwell said.

Officials from the two hospitals, who have been discussing a deal for several months, didn’t specify what new programs they would launch or how many beds they would add. But they said that even 10 more beds would allow them to treat 300 more children each year.

Franciscan Children’s was founded in 1949 by the Franciscan Missionaries of Mary, an order of Catholic nuns. It specializes in treating mental health disorders and in rehabilitating severely ill children, including premature babies who need breathing tubes. It also runs a dental clinic and a day school for children with special needs. Most of its patients are on Medicaid.

Under the proposed transaction, Franciscan Children’s would maintain its own board and leadership but become part of the Boston Children’s corporate structure.

The deal requires approval from the state’s Department of Public Health, the Attorney General’s Office, and other state regulators. It also needs the support of church officials, including the Franciscan Missionaries of Mary and the Vatican. The approvals are expected to take up to 12 months.

The Health Policy Commission, a watchdog agency that studies the Massachusetts health care market, said it will closely review the deal as soon as the hospitals file their plans with the state. “The HPC’s review will include assessing any impact on health care costs and the quality of and access to care,” spokesman Matthew Kitsos said.

“Boston Children’s is already a high-priced hospital,” said Sam Richardson, a health economist at Boston College. “They do have an incredible amount of market power. If they were to acquire Franciscan Children’s, that is only likely to go higher.”

“That isn’t the only way for them to offer children’s mental health services,” Richardson added. “They could invest in children’s mental health treatment without acquiring another hospital.”

Franciscan Children’s had been developing plans to expand services on its own, but combining with Boston Children’s will allow it to better train and recruit staff and provide access to more patients, said Dr. James Mandell, chairman of the Franciscan Children’s board.

Boston Children’s plans to spend at least $40 million to $50 million to improve and expand the Franciscan campus.

“This is about: how do we really change the way we envision the care for these children in the future?” said Mandell, a former chief executive of Boston Children’s. “No matter how hard we’ve tried, we have not been able to meet the needs. … This has the opportunity to be transformative and make a real difference.”

Mandell said a longstanding partnership between Franciscan Children’s and McLean Hospital, part of the Mass General Brigham system, would continue.

The deal with Franciscan Children’s would be the first of its kind for Boston Children’s, which has expanded in recent years by adding doctors groups and building new facilities but has never added another hospital under its umbrella.

Boston Children’s is already seeking state approval for a $435 million expansion in several communities outside its Boston hub, including the construction of a new surgery center off Interstate 95 in Needham. It’s also in the middle of a more than $1 billion project to add an 11-story clinical building in the Longwood section of Boston, which drew concerns about its impact on health care costs before ultimately gaining approval from regulators.

Boston Children’s has 415 beds and collected more than $2.6 billion in revenue in fiscal year 2020. Franciscan Children’s is a fraction of that size, currently running 81 beds and collecting $67 million in revenue last year. Both are structured as nonprofit organizations.

Boston Children’s is among many hospitals that have been increasing their capacity to treat mental health patients as the numbers of people needing care increased during the pandemic. Last week, the hospital opened 12 inpatient psychiatric beds at a campus in Waltham.

At hospitals across the state last week, 716 patients were in emergency departments or medical-surgical units waiting for mental health treatment, according to the Massachusetts Health & Hospital Information. Of those waiting for care — also known as “boarding” — in hospitals, 174 were children.