Two prominent New England HMOs have the go-ahead to merge after riding out an 18-month regulatory storm, but they're not jumping at the chance to consolidate under terms of the provision-laden approval agreement.
Last week, Harvard Pilgrim Health Care and Matthew Thornton Health Plan said they expected "to take a number of weeks to reach a final decision" on whether to accept the conditions under which the New Hampshire Department of Insurance will permit Harvard Pilgrim to acquire Matthew Thornton from owner Dartmouth-Hitchcock Medical Center.
The two HMOs and Dartmouth-Hitchcock said they're "analyzing the conditions that are part of the order and considering next steps." Spokeswomen for the two HMOs would not elaborate on the sticking points in the state's order, but public testimony has focused on antitrust concerns related to Harvard Pilgrim's attempt to inherit the exclusive services of primary-care physicians associated with Hitchcock Clinic (Sept. 25, 1995, p. 38).
The 500-physician clinic has exclusive ties to Matthew Thornton as part of the same Dartmouth-Hitchcock organization. The clinic in January 1995 merged with Burlington, Mass.-based Lahey Clinic to form a 900-physician organization.
The New Hampshire attorney general's office cleared the latest acquisition as long as the purchase agreement eliminated exclusive arrangements in Lebanon and Keene, two key population centers, and in medically underserved areas. The insurance decree included all those areas and added a third key market, the state's capital city of Concord.
In addition, the insurance department required a claims reserve to be established to protect enrollees in the event of insolvency. The reserve would be the plan's estimate of total outstanding liability for uncovered expenditures for enrollees.
The combination of Brookline, Mass.-based Harvard Pilgrim and Lebanon, N.H.-based Matthew Thornton would result in a network of 1 million enrollees in Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The deal has been vigorously opposed by Healthsource, a national HMO headquartered in Hookset, N.H., and other competitors seeking a primary-care foothold in the state.