Partners HealthCare acquisitions under fire from new Massachusetts AG Maura Healey

Politician plans to block the merger on the grounds that it would make the state’s largest health system too big to function fairly.

Several acquisitions by Partners HealthCare are on the verge of being undone by new Massachusetts Attorney General Maura Healey.

Partners’ proposed takeover of the South Shore hospitals and two Hallmark Health facilities was conditionally approved by the former attorney general, but Healey plans the block the merger on the grounds that it would make the state’s largest health system too big to function fairly.

“One of the greatest challenges for our Commonwealth is controlling health costs while promoting quality and access, and I evaluated this issue with that goal in mind,” said Healey, the former business and labor chief under her predecessor, Martha Coakley. “Should the Court decline to enter the settlement, my office will exercise its right to void the agreement with Partners. I anticipate we then would litigate to enjoin Partners’ proposed acquisition of South Shore Hospital.”

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Coakley, who lost a 2014 bid for governor, reached a deal with Partners that permitted the acquisition of the suburban hospitals on the condition that the health system keep prices indexed to inflation for six years and cap the size of its physicians groups for five years.

Partners was formed in 1994 through the merger of two of the country’s top teaching hospitals, Massachusetts General and Brigham and Women’s. Over past two decades Partners grew to become a major health system, attracting legions of loyal patients and clinicians and expanding with community hospitals, outpatient facilities, a rehabilitation network and more recently a health plan.

Partners has also faced criticism for using the prestige of Mass General and the Brigham to net consistently high reimbursement payments from private insurers afraid of losing access to Boston’s most famous hospitals. Partners has argued that the health system’s reimbursement is justified due to its complex, high acuity patients treated at the academic medical centers. Outgoing CEO Gary Gottlieb, MD has also outlined a population health strategy for Partners that hinges on Partners’ acquisition of the suburban hospitals since it would enable them to care for more patients locally.

Partners first proposed the acquisitions in 2012, and agreed to the settlement with Coakley last year. But since then, health systems like Beth Israel Deaconess and Tufts Medical Center have joined the opposition to the deal.

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“We have heard from supporters of our plan and from those against it who suggest we will significantly increase costs if we are permitted to consummate these partnerships,” Gottlieb wrote in a letter to the Boston Globe last fall. “The truth is we will not. In our agreement with the Massachusetts attorney general, these hospitals will have individual insurance contracts, with our prices capped at general inflation, for six and a half years. Over this period of time, there is no one who believes that that status quo will remain. New payment models and price transparency are emerging; we will lose patients and trusted referral sources if our costs are too high.”

Healey said she is concerned  pricing and physician caps would not prevent the health system from becoming too big. She also questioned the provisions that allow community hospitals to contract independently with insurers, since the Massachusetts Association of Health Plans “declines to vouch for its utility.”

“I would prefer to reverse the order of events and instead consider any future proposed Partners’ expansion only after Partners demonstrates an ability to contribute to health care cost containment in Massachusetts,” Healey wrote in her court filing. 

Twitter: @AnthonyBrino