Board gives thumbs down to Partners acquisition

Altman refers group’s report to Attorney General

The board of a relatively new state commission set up to rein in health care costs gave a unanimous thumbs down on Wednesday to Partners HealthCare’s proposed acquisition of South Shore Hospital and a 65-member physicians group. It is now up to Attorney General Martha Coakley to decide whether to reject the proposed acquisition.

The nine-member Health Care Policy Commission was careful to say that its decision was based only on the Partners proposal and didn’t signal an unwillingness to approve other acquisitions in the future. Several members of the commission said their opposition was based primarily on the fact that Partners promised medical savings down the road but offered little in the way of evidence that those savings would ever materialize.

“We want to support commercial consolidation that truly brings efficiencies to the system,” said Stuart Altman, the chairman of the commission and a professor at Brandeis University.

The commission’s staff predicted the acquisition would actually increase total medical spending by $23 to $26 million each year — $15.8 million from higher prices paid to physicians and as much as $10.6 million from physician referrals to more expensive Partners and South Shore facilities. The staff said the cost impact would probably be higher since their calculations were based on only a portion of the market.

Paul Hattis, a commission member who works at the Tufts University Medical School, accused Partners of basing many of its savings claims on inaccurate data. At one point he said he could find no basis for a claim that a 5 percent savings would be realized from the proposed acquisition. “That figure is out of thin air,” he said.

Peter Brown, a spokesman for Partners, said the Health Policy Commission seems to be focused on the past and outdated information while it should focus on recent successful efforts by the health care giant to improve care at lower cost. He said health care is changing rapidly and Partners is changing with it. “We’re mystified as to why they would dismiss success,” he said.

Although the commission said its ruling was based only on the proposal before it, the decision creates some doubt about the rapid-fire consolidation going on in the health care market as hospitals and physicians try to prepare for accountable care, governmental jargon for health care providers delivering care on a budget. Those that are able to deliver quality care below a set budgeted amount will earn a profit while those who fail to do so will lose money. Most health care providers believe they need lots of patients and a well-coordinated network of physicians and health facilities to rein in costs, but some analysts fear market consolidation will only drive up costs.

“I think putting a brake on market consolidation is a very good thing,” said Jean Yang, a commission member who also serves as the executive director of the Commonwealth Health Insurance Connector Authority.

The commission is charged with limiting the annual per-capita increase in health spending to the rate of state economic growth, which was projected at 3.6 percent for 2013. Commission members didn’t focus on the target of a 3.6 percent increase, instead indicating they wanted to see evidence that health care spending would fall if they approved the acquisition.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Coakley declined comment through her spokesman. In the past, her office has raised concerns about the ability of Partners to win health insurance contracts that pay the health care giant far more for care that other facilities deliver at much less cost. If she rejects the Partners acquisition, it’s likely the issue will head to court.

The expansion of Partners, a $9 billion nonprofit with a fleet of lobbyists and powerful connections throughout the state, could become an issue in the governor’s race. Coakley is mounting a campaign for governor this year and several of the other candidates have backgrounds in the health care field.