Health policy agency critiques Partners deal

Raises concerns but doesn’t urge rejection

The state’s Health Policy Commission raised concerns on Thursday about some aspects of Attorney General Martha Coakley’s proposed agreement with Partners Health Care on hospital acquisitions, but the agency did not urge Superior Court Judge Janet Sanders to either approve or disapprove the settlement.

The commission, citing cost concerns, said in February that it opposed the Partners acquisition of South Shore Hospital and referred the matter to Coakley. The agency more recently issued a preliminary report raising concerns about the cost impact of Partners’ proposed acquisition of two Hallmark hospitals in Medford and Wakefield.

Coakley chose not to challenge the hospital acquisitions in court and instead negotiated an agreement with Partners that caps at the rate of general inflation how much the Boston-based health care system can charge overall for its services, prohibits further expansion for most of the next decade, and allows insurance plans to negotiate with Partners as a whole or with individual hospitals within the system on rates.

The Coakley-Partners agreement must be approved by Sanders, who has asked for public comment and scheduled a hearing on the matter for Aug. 5. Coakley on Thursday urged Sanders to postpone the hearing until early September – after the Health Policy Commission issues its final report on the Hallmark acquisitions. The Coakley-Partners agreement allowed for renegotiating the deal to reduce any cost impact of the Hallmark acquisitions.

The Health Policy Commission on Thursday voted unanimously to send a fairly cautious comment to Sanders that said Coakley’s agreement should mitigate the cost impact of the Partners acquisitions, particularly in terms of what the system charges on average for its services. But the comment suggested one weakness of the agreement is that it won’t fully regulate increased health care spending as patients shift to higher-priced Partners providers.

“Without lasting change to the market structures and incentives that underlie the operation of bargaining leverage, price caps on their own may not be effective in keeping costs down,” the comment said.

The comment also noted that Partners, South Shore Hospital, and Hallmark have advocated for the acquisitions on the grounds they will lower total medical spending by the combined organization. “As such, increases in total medical spending and growth in unit prices would be inconsistent with those claims,” the comment said.

Stuart Altman, the chairman of the commission, said negotiating the wording of the comment required a lot of late-night negotiations among commission members. He said the agency never intended to recommend the judge approve or reject the acquisitions. “It’s not our role,” he said, pointing out that such a recommendation would be beyond the agency’s legal authority.

Steve Grossman, the state treasurer and a Democratic candidate for governor, filed his own comment, saying he could not support the agreement in its current form. Grossman told the South Shore Chamber of Commerce on Tuesday that he didn’t plan to file a comment, but he said he changed his mind as he studied the issue more closely over the last two days.

As required by Judge Sanders, Grossman filed his comment with Coakley, his rival in the Democratic race for governor, who will forward all the comments to the judge along with her response. Grossman said the state cannot afford to let “one bad deal take us down the wrong track for years to come.” He added: “Your rhetoric as attorney general has emphasized transparency and the lowering of health care costs. But in negotiating this current deal, you have fallen far short of each of those objectives.”

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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.

A spokesman for Republican gubernatorial candidate Charlie Baker said he does not intend to file a comment on the Coakley-Partners agreement.

Alan Sager, a professor of health policy and management at Boston University, also submitted a comment on Thursday that was very critical of the consent agreement.

“You have negotiated and publicly trumpeted a set of apparent constraints on Partners’ behavior,” Sager wrote. “But you offer no convincing evidence that these constraints on behavior are likely to be practical, effective, or even enforceable. Have they been tried elsewhere? Did they work? How often? Without this evidence, it is likely that the constraints you have negotiated will actually enable Partners to garner substantial revenue increases. Right now, the constraints look like feeble regulatory Lilliputians, unable to restrain Partners’ Gulliver.”