Partners urged to scuttle deals

Staff Writer
Columbus CEO

With the state Health Policy Commission voting to accept a preliminary report warning Partners HealthCare System's expansion plans would raise costs and lessen competition, one commissioner Wednesday called on Partners to scrap plans to acquire South Shore Hospital in Weymouth and nearby Harbor Medical Associates.

Commission member Paul Hattis said during a State House session that he found the evidence presented in a review of the proposed deals to have "frightening" implications for efforts to tame health costs in Massachusetts.

Referring to Partners and the hospital and doctors group that have agreed to join it, Hattis, an assistant professor of public health at Tufts University School of Medicine, said, "I hope they will consider that the best way forward at this point is to abandon these proposed transactions."

Partners vice president Rich Copp and South Shore Hospital spokeswoman Sarah Darcy said they have no intention of backing off on the merger plans. Copp said Partners will make a "comprehensive response" to the commission report within the next 30 days.

''Nothing that we have seen or heard changes our mind about the value our proposals offer to patients in Southeastern Massachusetts," Copp said. "The report contains old data based on a different marketplace." Referring to recent federal and state health care overhauls, he added, "The new marketplace calls on providers to better coordinate patient care and offer patients better value. That is what these 1/8acquisition3/8 plans do."

Commission chairman Stuart Altman reiterated that the final report won't be completed until next month, after Partners and anyone else has a chance to comment on the findings laid out Wednesday.

''What we're dealing with here is a preliminary report," Altman said. "To the extent that the comments warrant, the commission will make changes."

Created by last year's cost containment law, the commission is charged with helping to bring medical spending increases in line with the state's economic growth. Proposed industry alliances that could jeopardize that goal are subject to extensive reviews.

Commission members voted Wednesday to move forward with two other reviews: Partners' proposed takeover of Hallmark Health Systems, which operates Melrose-Wakefield Hospital and Lawrence Memorial Hospital in Medford; and Burlington-based Lahey Health's proposed acquisition of Winchester Hospital.

Partners, the Boston-based parent of Massachusetts General and Brigham and Women's hospitals, is under scrutiny by the commission because it is the largest hospital and physicians organization in the state and received at least one-third of the reimbursements Massachusetts insurers made to acute care hospitals in 2012, according to an analysis released earlier this year.

The commission isn't authorized to block mergers or other alliances. But it plans to refer the final report to state Attorney General Martha Coakley's office. That office has been working with the Department of Justice for four years on a joint investigation into whether Partners has used its market power to restrict competition in the health care industry. The antitrust investigators could sue Partners to prevent its acquisitions.

Karen Tseng, the commission's policy director for market performance, said the review of Partners' moves on the South Shore projected they would increase spending by the state's three largest health insurers by between $23 million and $26 million, overwhelming potential savings from plans to streamline operations and improve coordination of care.

Tseng also said Partners and South Shore Hospital, which already control half the market for inpatient care in the region, could grow stronger at the expense of competitors. "This raises concerns about effective market functioning that warrant further review," she said.

In a statement issued by 378-bed South Shore Hospital Wednesday, president Richard Aubut said its merger with Partners would create an integrated system that could improve health care access and affordability.

''Although we have not had an opportunity to examine the preliminary cost and market impact review in detail," he said, "it appears that many of its conclusions are based on a review of retrospective data. In planning this merger, we have looked forward."