Healthcare Business News

Partners HealthCare marks $42 million for Mass. tax

By Melanie Evans
Posted: December 18, 2012 - 6:45 pm ET

One prominent Boston health system plans to pay $42 million under a tax in Massachusetts' healthcare cost-containment law.

The money from Partners HealthCare, which totals less than one-half of 1% of the system's 2012 expenses, will help finance a state trust fund for investment in healthcare reform initiatives by distressed Massachusetts hospitals.

The Massachusetts law, an ambitious and widely watched attempt to contain rising healthcare costs, includes provisions to promote health information technology, accountable care and new payment models.

The tax could raise $135 million from Partners, other large hospital operators and insurers. The tax is limited to hospital operators with at least $1 billion in assets and less than half their revenue from public payers.

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The Massachusetts Health Policy Commission, which met for the second time Tuesday and will oversee multiple initiatives of the cost-containment law, plans to release draft regulations for the tax before the year ends and final rules in January.

Until then, it's unclear if CareGroup, which includes Beth Israel Deaconess Medical Center, will be subject to a tax, said Jerry Berger, a spokesman for Beth Israel Deaconess.

Partners reported the projected tax as a $42 million charge in fiscal 2012. The charge did erase Partners' operating gains for the final three months of fiscal 2012, which ended in September. Nonetheless, Partners ended the year with an operating margin of 2.12%, or income of $190.9 million on revenue of about $8.89 billion, compared with the prior year's operating margin of 2.75%, or income of $232.8 million on revenue of $8.48 billion.

The tax may not do enough to aid distressed hospitals, and trust-fund grants may not be the most efficient way to identify capital projects that will aid hospitals' long-term survival, said Alan Sager, a professor of health policy and management at Boston University's School of Public Health. Sager said already distressed hospitals could see greater financial strain from new reform requirements without adequate financial aid.

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