The Massachusetts Health Policy Commission to Partners’ proposed acquisitions: Nope

This is a complete and total smack-down of Partners ambitions to acquire South Shore Hospital (SSH) and Harbor Medical Associates:

Cost Impact: Over time, for the three major commercial payers studied, these transactions are anticipated to increase total medical spending by $23 million to $26 million each year as a result of increases in [] physician prices and increased utilization of Partners and SSH facilities. The resulting system is anticipated to have increased ability to leverage higher prices and other favorable contract terms in negotiations with commercial payers. The cost impact of this increased leverage is not included in the above projection, and will be substantial if payers are unable to prevent the exercise of the parties’ leverage in future contract negotiations. Overall, based on the evidence the parties provided, increases in spending are anticipated to far exceed potential cost savings from expanding Partners’ existing PHM [population health management] initiatives into the South Shore region.

Care Delivery Impact: Partners’ work on PHM demonstrates potential for improving care delivery and health outcomes. However, the parties have not provided adequate evidence showing how these transactions are likely to drive overall improvements to South Shore providers’ performance. Furthermore, given SSH and SSPHO’s [South Shore Physician Hospital Organization] historically strong quality performance, and their own experience managing populations through riskbased payments, it is unclear how corporate integration of the parties is instrumental to raising quality performance in the South Shore region.

6. Access Impact: Partners and SSH have not proposed specific changes in services that would cause the HPC [Health Policy Commission] to anticipate changes to their existing hospital service mix and payer mix trends. Combining providers with similar profiles of high commercial payer mix may reinforce the resulting system’s financial strength vis-à-vis area competitors.

In summary, based on our review, including our findings on the parties’ prices, total medical expenses, and market share, we find that the proposed transactions between Partners, SSH, and Harbor will increase health care spending, likely reduce market competition, and result in increased premiums for employers and consumers. We find the parties have not provided adequate evidence showing how the proposed transactions are likely to drive overall performance improvements of South Shore providers, or how corporate integration of the parties is instrumental to achieving proposed care delivery reforms. [Bold added.]

The report is long and includes a dissent from Partners to a preliminary draft of the report. I have not read it in full, but John McDonough has. His post is brilliant—you should read it—including a sketch of the health policy and political landscapes into which HPC’s report has dropped. Importantly, HPC has no authority. As such, it is less of a political target (though likely still a target) than it might have otherwise been.

In 2012, Governor Deval Patrick and the Legislature created the HPC to make these politically difficult findings. During the process in 2012 in creating the HPC, the House of Reps wanted to give HPC regulatory authority, and the Senate demurred, only wanting to give them the mandate to consider and the power of the pen. I’m now happy the Senate won. It was smart design. The HPC has done the hard analysis, and now it’s up to others to act. On their first hard decision, the HPC acted with integrity and smarts. Congrats to the members and staff for a job well done.

These are interesting times in Massachusetts.


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