"I understand this fact fully, but it is of critical importance that we rebuild our financial foundation so that we can continue our collective good works."
The archdiocese last month reported a $39.2 million loss for the fiscal year ended June 30, 2012. Excluding millions in unusual expenses, the archdiocese's cash outlays in fiscal 2012 still exceeded revenue by $17.4 million.
In addition to annual operating shortfalls, the archdiocese has huge long-term gaps in its balance sheet, totaling about $350 million, for pensions, self-insurance reserves, and money owed to a trust-and-loan fund for parishes.
Until now, financial recovery efforts have focused on selling real estate, cutting costs, and turning over high school operations to an independent nonprofit. Real estate sales have brought in about $15 million, needed to fund day-to-day operations. The announcement opens a new front in balancing its books.
"These are things that are not essential to the life of a diocese. What's essential are the parishes and after that, probably the schools in the minds of most bishops and the Catholic charities," said the Rev. Thomas Reese, a senior analyst for the National Catholic Reporter.
Reese, an expert on Catholic finances, said Philadelphia is unusual in the extent of its health-care operations.
Catholic Health Care Services, which operates six nursing homes and an assisted-living facility in Southeastern Pennsylvania, is the seventh-largest faith-based operator of such facilities in the United States, according to the archdiocese.
The facilities for sale are: Immaculate Mary Home, St. John Neumann Home, and St. Monica Manor in Philadelphia; Villa St. Martha and St. Martha Manor in Downingtown; St. Francis Country House in Darby Borough; and St. Mary Manor in Lansdale. Villa St. Martha is the assisted-living facility.
They have about 1,400 beds and employ 1,100 people full-time and 950 part-time, the archdiocese said. Catholic Health Care had $132.2 million in revenue and an operating loss of $7.73 million in the year ended June 30, 2012.
KPMG, an accounting and consulting firm, is advising the archdiocese on the possible sale.
It is difficult to estimate how much the sale might bring. Two years ago, New Courtland, a Philadelphia nonprofit, sold its network of five nursing homes with 1,200 beds for $75 million.
Steve Monroe, editor of the trade newsletter SeniorCare Investor, said the national average sales price per bed last year was $60,400, the second-highest average on record at the Norwalk, Conn., publication.
Under that scenario, Catholic Health Care could fetch more than $80 million, but the price could also be lower.
It is even harder to evaluate the possibilities with the cemeteries, experts said. Archdiocesan cemeteries, not including parish cemeteries, reported a loss of $4.39 million on revenues of $13.47 million in fiscal 2012.
The archdiocese's Catholic Cemeteries office employs 160 full-time and 30 seasonally, the archdiocese said.
The archdiocese would not be the first to involve a company in the operations of its cemeteries.
The Archdiocese of Los Angeles did so in 1997, said Larry Ansbach, president of American Cemetery/Mortuary Consultants in Las Vegas. Depending on how a deal is structured, it could boost revenue to the archdiocese because a company would likely be more aggressive about selling plots in advance, for example, Ansbach said.
The archdiocese said in its statement that "every effort will also be made to ensure continued employment for those currently working within the system."
One parishioner said he hated to see the archdiocese in such an aggressive sell-off mode.
"I guess they have to do it, come up with the money to pay all these bills," said William F. Grauer, who lives in Nether Providence Township and is a member of Nativity of the Blessed Virgin Mary Parish in Media.
"It looks like they have no alternative," he said.
Contact Harold Brubaker at 215-854-4651 or firstname.lastname@example.org.