Healthcare Business News
Dr. Howard Grant, president and CEO of Lahey Health

Massachusetts provider coalition protests Partners' expansion

By Bob Herman
Posted: June 12, 2014 - 1:45 pm ET

A coalition of Massachusetts health systems and physician groups is challenging an agreement that would allow the state's largest healthcare organization, Boston-based Partners HealthCare, to get even bigger.

The coalition—which includes Boston's Beth Israel Deaconess Medical Center and Tufts Medical Center, Cambridge Health Alliance, Lahey Health in Burlington, Atrius Health in Newton and several other community hospitals and physician groups—sent letters to state Attorney General Martha Coakley (PDF) and Deputy Attorney General Christopher Barry-Smith (PDF) asking that stakeholders have a say in Partners' new acquisitions.

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“Our position is quite simple: If it's really a good agreement for the Commonwealth, and the agreement is consistent with the intent of Chapter 224 (Massachusetts' healthcare cost-containment law), then it should be able to withstand public scrutiny,” said Dr. Howard Grant, president and CEO of Lahey Health.

At issue is a proposed deal struck in May between Partners and the state attorney general's office. Under the agreement, the 12-hospital Partners system would acquire Hallmark Health System in Melrose, Mass., and South Shore Hospital in South Weymouth, Mass., but with several stipulations. For example, Partners would not be able to raise prices systemwide more than the general inflation rate, which has hovered between 1% and 2%, and is lower than the rate of medical inflation.

In addition, for the next decade, private payers will be able to contract separately with the system's academic medical centers in Boston—Massachusetts General Hospital and Brigham and Women's Hospital—and its community hospitals and physician groups.

But the coalition wrote that Partners' continued expansion has “significant and deleterious impacts on the entire Massachusetts marketplace.” For instance, the group said the price cap regulation would have little effect, because Partners already commands some of the highest prices in the state. Indeed, in 2012, Partners' hospital prices were well above the median—between the 70th and 90th percentiles—for all commercial payers, according to data from the Commonwealth of Massachusetts Center for Health Information and Analysis. Partners' physician groups similarly charged higher-than-average prices to most insurers, with prices ranging between the 75th and 100th percentiles.

Community hospitals in the state also are concerned, saying their operations will be at risk if more patients are ultimately filtered to higher-cost tertiary facilities. “The growth of Partners will threaten the viability of low-cost hospitals that are already delivering high-quality care,” Grant said.

In response, Partners said its process with the attorney general's office and the state's Health Policy Commission, which monitors and evaluates hospital transactions, has been “open and transparent.” The system also said it believes the proposed settlement is fair. “This is an agreement, in principle, that will improve patient care, result in more coordinated patient care, and will help slow growth in healthcare costs,” said Rich Copp, spokesman for Partners.

Brad Puffer, a spokesman for Coakley's office, said officials have received the coalition's letters and are reviewing them—but did not immediately address the points raised. “Our agreement, in principle, would help to control costs and level the playing field in the market,” he said. “The negotiations are ongoing, but we are committed to being transparent and allowing for feedback, should a final agreement be reached.”

Many of the coalition's members, including Beth Israel Deaconess and Lahey Health, have been involved in their own transactions. Lahey's Grant said consolidation in today's healthcare environment makes sense, but only to the extent that healthcare costs are actually reduced.

“I think the consolidation of health systems and physician groups to gain greater efficiencies—in order to be able to make legitimate investments in IT and realize certain administrative savings—does not necessarily need to result in higher costs,” Grant said.

Follow Bob Herman on Twitter: @MHbherman

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