State agency at odds with partners over Hallmark acquisition

Photo: Thinkstock
Photo: Thinkstock

STATE HOUSE, BOSTON, SEPT. 3, 2014…..The head of an independent commission focused on health care spending and market forces on Wednesday called for changes to a proposed settlement between Attorney General Martha Coakley’s office and Partners HealthCare System.

Dr. Stuart Altman, who chairs the Health Policy Commission, said the commission’s final report, issued on Wednesday, demonstrates that Partners’ proposed merger with Hallmark Health in northeastern Massachusetts, even with the agreement between Partners and Coakley’s office, would lead to higher costs.

The vice chair of the commission, Wendy Everett, who heads the Network for Excellence in Health Innovation, a national health policy research institute, said Partners’ defense of the merger did not provide enough information. “We have come to an opinion that we do not believe this acquisition is really going to benefit the Commonwealth and may even be to its detriment,” she said.

The settlement, currently sitting before a judge, seeks to end a long-running anti-trust investigation and allow Partners to proceed with two acquisitions of South Shore Hospital and Hallmark Health, with which Partners already has a clinical affiliation.

Brad Puffer, a Coakley office spokesman, called the commission’s report “thoughtful” and said that the agreement with Partners has an option to renegotiate the Hallmark portion. “Those negotiations begin today,” Puffer said in a statement. “We continue to work towards this strong consent judgment that will fundamentally alter Partners’ negotiating power and save costs across the entire network, accomplishing more than a lawsuit would have done.”

Partners and the commission, which analyzes health care spending and market trends, disagree over both proposed acquisitions, with Partners arguing they will result in savings and the commission saying the acquisition of Hallmark will drive increases in spending ranging from $15.5 million to $23 million per year in northeastern Massachusetts.

“They lacked credible evidence to turn around what our initial analysis had said, which is that when this transaction goes through, it’s just going to lead to a reduced competitive environment and higher prices,” Altman told reporters.

Asked whether Coakley’s settlement with Partners should be adjusted, Altman said, “Absolutely.”

The commission approved its report on the South Shore Hospital portion of the proposal earlier this year, raising similar concerns.

During the commission’s discussion of its report on Hallmark, Altman said the commission is not “anti-Partners” but if the evidence is available, “we’re going to do the best job we can about analyzing what we think is going to happen.”

Rich Copp, a Partners spokesman, said the organization disagrees with the commission and added that the merger with Hallmark will deliver increased coordinated care at a lower cost, closer to patients’ homes. “We provided the Commission with specific information, which detailed our plans, including an expanded commitment to behavioral health services,” he said in an email. “This transaction is a unique opportunity for us to work with Hallmark Health in order to improve patient care for Massachusetts residents living north of Boston.”

In an Aug. 1 response to the commission’s preliminary report, Partners and Hallmark officials wrote that there was “no reason in these circumstances” for the commission to make a referral to Coakley’s office. They added that the transaction would yield an average of $21 million in annual savings.

Ten members of the commission, which includes Gov. Deval Patrick’s budget chief Glen Shor and Health and Human Services Secretary John Polanowicz, voted to refer its final report on the proposed Hallmark acquisition to Coakley’s office. Veronica Turner, the executive vice president of SEIU 1199, abstained because she has led negotiations with a Hallmark hospital.

The commission also voted to send the report to Superior Court Judge Janet Sanders, who is weighing the agreement between Coakley and Partners. The judge had agreed to hold off on a decision on the agreement until after the commission issued its report on Hallmark.

Coakley, who is running for governor, has taken hits from her two Democratic rivals and others over the proposed agreement, with Treasurer Steve Grossman and pediatrician Don Berwick pointing to the commission’s analyses. A coalition that includes Partners’ competitors, such as Beth Israel Deaconess Medical Center and Tufts Medical Center, has also slammed the agreement, saying it will enhance Partners’ market dominance.

Coakley’s office has argued that the settlement places restrictions on Partners over a range of years, including curbing its contracting practices, prices and physician network growth over the next five to 10 years.

Hallmark Health System operates two hospitals – Lawrence Memorial in Medford and Melrose-Wakefield Hospital in Melrose – as well as several outpatient facilities with 400 physicians.

A public comment period on the settlement is open until Sept. 15, and letters for and against the settlement are being posted to the attorney general’s website.

The hearing on the settlement is set for Sept. 29.

The consent judgment was filed in Superior Court under Civil Action No. 14-2033-BLS2.

Copyright 2014 State House News Service

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