HMS Takes Interest in CareGroup Search

A search is now underway for a new CEO of CareGroup after James L. Reinertsen resigned last month as the chief executive of both CareGroup—a Harvard affiliated umbrella organization of six Massachusetts hospitals—and its flagship, the Beth Israel Deaconess Medical Center (BIDMC).

Since its creation during a wave of hospital mergers, CareGroup has struggled financially.

CareGroup’s future health is of crucial importance to Harvard, say University and Medical School officials.

Unlike many medical schools, Harvard doesn’t own the hospitals where its students are trained. But since twenty percent of HMS students are trained at BIDMC, officials say that the continuing financial viability of CareGroup is a concern.

In announcing Reinertsen’s resignation last month, CareGroup Chairman John P. Hamill thanked Reinertsen for his efforts but said that the hospitals’ fortunes had not improved quickly enough.

“[W]hile the results for this year will be better than last year, they will not meet expectations. The boards of both CareGroup and BIDMC have agreed that the scope of the turnaround effort…needs to be enhanced,” Hamill wrote in a statement.

CareGroup continued to hemmorage financially under Reinertsen’s direction, albeit at a slower rate.

Hamill will be leading efforts to find Reinertsen’s successor.

Harvard says it has an interest in righting the ship at BIDMC and CareGroup while at the same time protecting the educational mission at the hospitals.

“I would hope that the leadership they bring in will be able to turn them around while keeping medical education strong,” said Daniel H. Lowenstein, HMS dean for medical education.

According to Lowenstein, the medical economy is putting stress on the educational mission of Harvard’s teaching hospitals.

“There’s no question that the past ten years of evolution of the economics of medicine has forced academic medicine to act more and more like a competitive business,” he said.

In the face of deficits and strong competition, hospitals have to look to cut costs. Lowenstein said that since hospitals try to break even on clinical programs, and actually profit from research programs in the form of grants, they have to cut corners when it comes to education.

Lowenstein said that while HMS tuition is $28,000 a year, it is estimated that it costs $120,000 a year to educate an HMS student.

And Harvard’s unique relationship with its affiliates means a different set of challenges. The affiliation is based mainly on a “gentleman’s agreement” whose only text dates from the 1940s.

As a result of Harvard not owning its own hospitals, HMS needs to be sure that both the business and the educational perspective are taken into account, Lowenstein said. Hence HMS hopes to play an active role in the selection of Reinertsen’s successor and the future direction of Harvard’s teaching hospitals.

“We seem to be at the table so far,” Lowenstein said.

Leadership is coming from the top down, involving not only HMS Dean Joseph P. Martin, but also the University’s central administration.

“Harvard has a great stake in its teaching hospitals,” University President Lawrence H. Summers said in an interview last week.

“One of the things I’ve done over the last few months is spend time with people from the teaching hospitals, and Joe Martin discussing the Boston-area medical scene.”

But the University’s worries aren’t confined to preserving the educational mission. Harvard is also affiliated with Partners, CareGroup’s rival hospital organization, which represents Mass. General and Brigham and Women’s hospital.

“There’s no question that competition is not in the best interest of the hospitals or the school,” Lowenstein said.

Fostering a collaborative spirit has been one of Martin’s goals, Lowenstein said, something with which he “has done a great job.”

—Staff writer David H. Gellis can be reached at gellis@fas.harvard.edu.