Coalition of Health Providers Seeks Rejection of Partners Settlement

BOSTON, Sept. 11, 2014 /PRNewswire-USNewswire/ -- A coalition of nonprofit hospitals and physician groups is urging a Suffolk Superior Court judge to reject a proposed settlement between the Attorney General's Office and Partners HealthCare System, Inc. (Partners) that would allow Partners, already three times larger than its next closest competitor, to expand significantly.

The agreement, reached to settle antitrust charges brought by the Attorney General against Partners, relies on untested remedies and is likely to raise costs for Massachusetts consumers, attorneys for the coalition stated in a legal filing today.

 The proposal, which is under review by Suffolk Superior Court Judge Janet L. Sanders, "will result in substantial and continuing increases to the already unsustainably high cost of health care services in the Commonwealth," coalition attorney Andrea Agathoklis Murino noted in a letter accompanying the 86-page filing, adding "if approved, citizens of the Commonwealth will be left paying far more for healthcare than they should in an otherwise competitive landscape."

The coalition submitted its comments to Attorney General Martha Coakley as part of a public process initiated by Judge Sanders after the providers objected to the settlement negotiated between Coakley's office and Partners. Judge Sanders asked for comments to be submitted to the Attorney General by Sept. 15; the Attorney General has until Sept. 25 to submit the comments, plus any commentary her office may have, to Judge Sanders in advance of a scheduled Sept. 29 hearing.

In her letter, Murino notes that "per capita health care spending in Massachusetts is now the highest of any state in the nation," as Partners has used its market power over the past 20 years to accumulate total net assets that are more than double the combined assets of the next five largest health care systems in Massachusetts. Tracing that cost growth to Partners' addition of six hospitals and more than 7,000 physicians since its creation in 1994, Murino argues "as a result of this expansion, health care services in Massachusetts have become increasingly concentrated in Partners' high-cost facilities."

"Partners' hospitals generally receive the highest prices in their service areas and Partners' physician groups receive higher prices than nearly all physicians groups in Massachusetts. Moreover, the Attorney General has demonstrated that such prices are not the result of Partners' patients being sicker than patients of other providers or the quality of Partners' services being better than the quality of other providers' services," the letter states.

 The agreement, if approved by Sanders, would allow Partners to acquire four more suburban hospitals and their physician-hospital organizations – including South Shore Hospital, Lawrence Memorial Hospital in Medford and Melrose-Wakefield Hospital – and potentially Emerson Hospital in Concord. Partners' net patient service revenues and total operating revenue will increase by $1 billion and $10.4 billion respectively and increase Partners total cash by $7.9 billion. The increase in size and resources will cement Partners' already-significant market clout when negotiating with insurers at the expense of other providers, many of whom serve more low-income patients than Partners' hospitals.

The coalition, led by Atrius Health, Beth Israel Deaconess Medical Center, Lahey Health System and Tufts Medical Center, focused on four specific concerns in its filing: ineffective price growth caps; so-called "component contracting"; physician "growth restrictions" which are really a path to more growth; and the agreement's ambiguity around monitoring the proposed remedies.

Price growth caps  "can be manipulated in several ways, and would be in force for only 6 1/2 years, during which time Partners would maintain, and likely improve, its market-power-derived price advantage over other providers, and after which time Partners could use its increased market power to raise its prices with impunity."

Component contracting "places no meaningful restrictions on Partners' ability to continue to use its bargaining leverage to extract higher prices and other favorable contract terms from payers. It is a disfavored remedy with no record of success in Massachusetts or any other market."

Physician growth restrictions are "in fact, an ambitious Partners' community physician network growth plan, allowing Partners to grow its existing community physician network by 33 percent over the next five years." The new network of community and Boston-based physicians would then be larger than any of the principal competitors, without taking into account the thousands of academic specialists in Partners' network. And, because competitor networks would shrink as Partners' grows, the size differential would be even greater over the next five years.

Monitoring compliance with the "patchwork of unproven behavioral constraints disfavored by other federal and state antitrust enforcers … would impose a tremendous burden on the Compliance Monitor and the Court to interpret and enforce during their five-to-ten-year terms."

The proposed settlement was negotiated despite findings by the Health Policy Commission – an expert state agency formed through the 2012 health care cost containment law – that stated the proposed merger between Partners, South Shore Hospital and its physician organization, would increase health care costs between $23 million and $26 million annually.

The HPC reinforced that finding in a cost and market impact report released Sept. 3 that suggested Partners' acquisition of Hallmark Health and its physician organization – included as part of the consent agreement – would increase costs between $15 and $23 million annually.

Members of the coalition include: Atrius Health, Inc., Beth Israel Deaconess Medical Center, Inc. and its affiliates (Beth Israel Deaconess hospitals in Needham, Milton and Plymouth), Harvard Medical Faculty Physicians at Beth Israel Deaconess Medical Center, Inc., Lahey Health System, Inc., (including Lahey Hospital & Medical Center, Addison Gilbert Hospital, Beverly Hospital, Lahey Medical Center Peabody and Winchester Hospital) Mount Auburn Hospital, New England Baptist Hospital, and Tufts Medical Center, Inc.

SOURCE Tufts Medical Center