Partners, Harvard Pilgrim table merger talks

Update at 3:30 PM CT

Partners HealthCare and Harvard Pilgrim Health Care are tabling their planned merger after executives reportedly felt the deal was getting too complicated.

Boston-based Partners, Massachusetts' dominant health system, and Wellesley, Mass.-based Harvard Pilgrim, the state's second-largest health plan, announced in May they were considering a possible merger. On Friday, the not-for-profit companies confirmed the merger talks were on hold.

"Our discussions with Partners HealthCare have always been focused on exploring ways we can improve and enhance the patient experience while helping to control costs," Harvard Pilgrim CEO Michael Carson said in a statement. "We continue to evaluate opportunities to collaborate with Partners on this important mission."

Partners CEO Dr. David Torchiana told the Boston Globe the deal was getting too complicated and was bound to face regulatory scrutiny. He said the announcement doesn't rule out the possibility of a future deal.

"I don't think either organization is sure that it's something that's actually possible to achieve … in this environment right now where there's such intense scrutiny of every move," Torchiana told the newspaper.

Partners' existing health plan, Neighborhood Health Plan, reported an operating loss of $5 million in the third quarter of 2018, compared with an operating gain of $34 million in the prior year period. NHP's premium revenue dropped 64% during the quarter. Partners is rebranding the health plan, and beginning Jan. 1, will call it AllWays Health Partners.

Partners, whose hospitals include Brigham and Women's Hospital and Massachusetts General Hospital, is still awaiting regulatory approval to acquire Care New England Health System of Providence, R.I.

Beth Israel Deaconess Medical Center and Lahey Health are still awaiting regulatory approval to form a health system they say will be large enough to compete with Partners. The combined entity would have 10 acute-care hospitals, compared with Partners' eight, and would have three affiliate hospitals and more than 4,000 physicians.

The Massachusetts Health Policy Commission issued a highly critical report on that proposed deal in July. The report said the Beth Israel Deaconess-Lahey deal's cost outweighed its benefits, and nothing would prevent the combined entity from raising prices, other than the state's annual 3.1% cost growth limit.

In June, Harvard Pilgrim's long-time CEO, Eric Schultz, abruptly resigned due to unspecified behavior he said violated the company's code of conduct. A Harvard Pilgrim spokeswoman said the resignation didn't affect its discussions with Partners.