Massachusetts: Partners, South Shore Merger Would Up Costs, Hurt Competition

The Massachusetts Health Policy Commission has released a report concluding Boston-based Partners HealthCare System's proposed acquisition of South Shore Hospital in Weymouth, Mass., will increase healthcare spending, reduce competition and cause premiums to rise for employers and consumers.

The commission members analyzed costs, quality and access to care at both healthcare organizations to determine the likely cost and market impact of the transaction. The merger would up total medical spending by $23 million to $26 million annually because of increases in physician prices and increased utilization of Partners and South Shore facilities, according to the report. The resulting larger system would also have more leverage to negotiate for higher prices from private payers.

In addition to finding the deal would lead to higher costs and less competition, the panel concluded Partners and South Shore did not provide adequate evidence concerning how the merger would improve South Shore performance and how integration is necessary to achieve proposed care delivery reforms. "Based on these findings, the HPC concludes that the transactions warrant further review and refers this report to the [attorney general's office]," the commissioners wrote.

The commission's final word on the potential transaction echoes its preliminary report. Last month, Partners refuted the earlier report, claiming the commission ignored savings from improving coordination and quality of care for privately insured patients and that the acquisition of South Shore and a related physicians' group would actually save approximately $27 million per year through population health management and care coordination efforts. The company also says the watchdog agency misinterpreted physician contracts with insurers.

Following the release of the final report, Partners Chief of Staff Peter Brown says the organization is still committed to the merger and maintains that the commission overlooked data on Partners' cost-saving initiatives, according to a report from The Boston Globe. Likewise, South Shore Hospital spokeswoman Sarah Darcy told the Globe the hospital disagrees with the commission and remains committed to completing the transaction.

The commission lacks the power to block mergers and has referred the case to Attorney General Martha Coakley's office for review, according to the report. Ms. Coakley and the U.S. Department of Justice have been scrutinizing the proposed acquisition as part of a broader review because of alleged anticompetitive behavior.

Massachusetts' first annual healthcare report drew further attention to Partners last August. It found Partners received 31 percent of the money Massachusetts commercial payers spent on acute-care hospital services the previous year. Partners-affiliated physicians also received 25 percent of payers' physician reimbursements in 2011.

Partners responded to the report's findings, saying the system cares for about 1.5 million patients each year, reasoning the results.

More Articles on Partners HealthCare:
Partners, Hallmark Health Nail Down Definitive Affiliation Agreement
Partners HealthCare Disputes State's Negative Assessment of South Shore Acquisition  
Massachusetts Commission to Review Partners Healthcare, Hallmark Health Deal