Partners-Care New England deal barely bumps Mass. healthcare spending
The proposed merger between Boston-based Partners HealthCare and Providence, R.I.-based Care New England Health System will have little impact on tertiary healthcare spending in Massachusetts, according to the Massachusetts Health Policy Commission.
In its first board meeting of the year on Wednesday, the commission said tertiary spending could jump by $180,000 per year if all of Lifespan's Rhode Island Hospital commercial patients migrated to Brigham & Women's Hospital after the merger. It's unlikely that drastic of a switch would occur, the commission noted.
The commission examined commercial prices for six complex cardiovascular, orthopedic and oncology DRGs provided by both Partners' Brigham & Women's Hospital and Lifespan's Rhode Island Hospital.
Massachusetts maternity-care spending could increase by up to $120,000 per year if all current Partners commercial patients living within 30 minutes of CNE's Women's & Infants Hospital decided to go to Women's & Infants instead of a Partners hospital. But the commission also noted it's unlikely that the deal would translate to meaningful shifts in maternity care. Women's & Infants has higher prices than Partners' Newton-Wellesley Hospital and Brigham & Women's in most instances.
"Even under some of these more unlikely scenarios of patient shifts, the numbers are not significant," said David Cutler, the commission's market oversight and transparency committee chair and a Harvard professor.
Rhode Island has an annual growth price cap on its hospitals of 1% above their urban growth index, in addition to a new benchmark limiting overall Rhode Island healthcare spending growth to 3.2% a year, commissioners said.
One area where there was a potential for reduced competition was near the Massachusetts-Rhode Island border around Sturdy Memorial Hospital and Charlton Memorial Hospital, which the commission will watch closely. Women's and Infants Hospital is substantially higher-priced than Sturdy and Charlton, according to the commission.
"If they could develop a more competitive environment for CNE and/or Partners in this area and negatively affect these hospitals even to point where one would go out of business, what impact does that have on the patients in Massachusetts?" asked Stuart Altman, chair of the commission.
The acquisition could improve the quality of care, especially in Rhode Island as the systems look to advance population health management, according to the commission.
Partners hospitals generally perform at or above average on patient experience, while CNE performance is mixed. On maternity care, Partners' Brigham & Women's Hospital generally outperformed CNE's Women's & Infants Hospital's metrics other than on one measure related to C-sections. Related to outcomes, the systems generally match their respective statewide average, the commission found.
Partners would acquire CNE's Kent Hospital in Warwick, R.I.; Women & Infants Hospital of Rhode Island in Providence; the VNA of Care New England in Warwick; Butler Hospital in Providence; and the Providence Center.
Care New England executives said the deal would help it regain solid financial footing, as Partners affiliate Brigham Health would become CNE's corporate parent. CNE reported an operating loss of $26.9 million on revenue of $1.13 billion in 2018, an improvement from 2017's $44 million operating loss on revenue of $1.13 billion.
Partners plans to help address deferred maintenance as well as enhance the scope and quality of CNE's services including building new ambulatory sites in Rhode Island that would not charge hospital facility fees. Officials said that CNE will continue under its own payer contracting and they don't plan to reduce current CNE services, including behavioral health.
Care New England gives Partners a significant entry point into the Rhode Island market. CNE has worked with Partners since 2009 through a clinical affiliation with Brigham and Women's Hospital in cardiology, vascular, thoracic and colorectal surgery. Partners' McLean Hospital and Care New England's Butler Hospital have also collaborated on behavioral healthcare and research programs.
During the hearing, the commission also reviewed its final 2018 cost report, the main finding of which is Massachusetts' total healthcare spending only grew by 1.6% in 2017, 2% below its state benchmark.
But Massachusetts continues to have higher hospital utilization than the U.S. across inpatient, outpatient and ED services, even though the gap has narrowed in recent years.
The share of low-acuity, community-appropriate inpatient care provided in community hospitals, rather than teaching hospitals or academic medical centers, increased slightly in 2016 and 2017, an improvement from downward trends in previous years.
Low-acuity, avoidable ED visits declined 12% between 2012 and 2017, but behavioral health-related ED visits increased 14% between 2012 and 2017.
The commission offered a series of recommendations including reducing administrative costs related to insurance billing and coding, risk adjustment, and quality measurement. Massachusetts should rigorously review the use of high-cost drugs and facilitate direct negotiation between its Medicaid and children's health coverage program and drug manufacturers.
The state should limit out-of-network billing by notifying consumers about potential out-of-network providers and regulating out-of-network reimbursement. Massachusetts should also aim to reduce provider price variation, implement a site-neutral payment policy, incentivize lower-cost care and a host of other recommendations related to social determinants, clinician licensing, integrated care models and alternative payment models.
The Massachusetts' attorney general gave a conditional green light on the merger between Beth Israel Deaconess Medical Center and Lahey Health to create the second-largest system in the state, which will heavily influence the competitive landscape.
The conditions include a seven-year price cap and $71.6 million in investments supporting healthcare services for low-income and underserved communities in Massachusetts.
Correction: In an earlier version of this story, the parent system of Rhode Island Hospital was misidentified. It is part of Lifespan.
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