Healthcare Business News

Partners' South Shore bid would raise costs, not quality, panel says

By Melanie Evans
Posted: February 19, 2014 - 7:45 pm ET

Partners HealthCare System's proposed acquisition of South Shore Hospital and a physician group would raise costs and do little for the quality of healthcare, the Massachusetts Health Policy Commission concluded in its first transaction review under the state's 2012 healthcare cost-control law.

The deal would drive up health spending by as much as $26 million a year based on cost projections for the state's three largest commercial insurers, the report said (PDF). There was not enough proof that quality—already high for both organizations—would improve, the commission concluded.

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The panel, created under a law that seeks to hold state spending in line with or below Massachusetts' economic growth, said it would refer the transaction to the state attorney general.

Officials with Partners HealthCare and South Shore Hospital, a 329-bed hospital in South Weymouth, Mass., rejected the findings and said they remained committed to the transaction.

“We have a distinct difference of opinion,” said Peter Brown, Partners HealthCare's chief of staff, who criticized the data analyzed by the commission as outdated. Brown said the findings do not reflect rapid changes in healthcare in response to policies such as the Patient Protection and Affordable Care Act and Massachusetts' 2012 cost-containment law.

Partners HealthCare, a Boston-based system with a dozen hospitals, must wait 30 days after the commission's final verdict before closing on the deal. Brown said the system will continue to cooperate with state and federal agencies reviewing the deal.

“In planning this merger, we have looked forward—to the future of healthcare and the rapidly evolving landscape in southeastern Massachusetts,” South Shore officials said in a statement. “Our merger is designed to produce enormous positive benefit through the redesign of healthcare delivery.”

The commission disagreed. Partners HealthCare and South Shore Hospital are profitable, with prices that are generally the highest in their markets, sometimes significantly so, the report said. Partners HealthCare's market share in the South Shore Hospital market would increase from 24% to 50% after the deal. The commission found little difference in the highly rated quality provided by both organizations.

Partners HealthCare's acquisition proposal calls for the system to invest $200 million in information technology and primary-care development in an effort to better manage population health, the report said. But benefits would not outweigh the cost of higher prices and use of healthcare services.

The organizations proposed the deal in December 2012, four months after Gov. Deval Patrick signed a nationally watched law intended to rein in healthcare spending. The commission examined its potential effect on the healthcare market, cost, quality and access.

Last July, the physician organization for Partners' Brigham and Women's Hospital announced plans to acquire the 65-physician multispecialty practice Harbor Medical Associates. Harbor Medical did not respond to a request for comment.

The report's projections were based on costs for the state's three largest health insurers—Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim Health Care and Tufts Health Plan—which account for 8 out of 10 commercially insured residents.

Follow Melanie Evans on Twitter: @MHmevans

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