As the financial health of Catholic Health Initiatives (CHI) suffers in the wake of its aggressive growth strategy, will its employees pay the ultimate price, giving up pensions they thought were secure?
Catholic Health Initiatives, which runs hospitals in 17 states, and claims to treat more than 46 million people, saw its bond rating downgraded by Standard & Poors last month.
The Catholic health care ministry, which took over several hospitals and medical clinics in Washington State last year, including Bremerton’s Harrison Medical Center and the Highline Medical system, appointed a new CEO earlier in the month. Citing poor financial results, the system says it will lay off 1500 people by the end of this month. According to Modern Health Care, operating performance in Washington State declined by $60 million “because of CHI’s investment in new EHR systems and disruption caused by their installation.”
A Standard & Poor’s director says that CHI’s financial troubles are a “huge hole to dig out of.”
Another bond rating system, Fitch, revised its outlook from stable to “negative,” saying that The Outlook Revision to Negative from Stable reflects “continued challenges in improving overall core operating performance, which was affected heavily by losses in certain market-based organizations (MBOs).”
The new lowered bond rating means that borrowing expenses for CHI/Franciscan are likely to rise even as it tries to dig itself out of the “huge hole.”
So what are the implications for employees and patients of CHI/Franciscan in Washington State?
Despite rosy recruiting language that promises a healthy future and competitive benefits, CHI is likely to look for all kinds of ways to make up the hole it now finds itself in, including looting the pensions of its current and past employees. Very recently, Providence Health was sued by its employees for underfunding its pension plan, raising the broader question of how employees at Catholic institutions will fare as pension liabilities outstrip the Church-run systems ability or willingness to pay down the line. A similar lawsuit faces CHI.
Keep in mind that Catholic Archdioceses made a regular practice of declaring bankruptcy to avoid having to pay victims who were victimized by pedophile priests.
Looting the pensions of its current and previous employees would seem to fit squarely within the character of an institution that uses bankruptcy and money transfers as tools to shield assets from child abuse victims.
No wonder Providence, CHI, and other Catholic entities are fighting in the courts for their “right,” as Church employers, to underfund pensions for the employees they claim to value.
Update: Here’s a link that summarizes current status of one of the lawsuits against CHI. Net is that the judge said that fiduciaries (including the CHI trustees) can be sued as individuals for breach of duty for underfunding pension assets.