Could breakup of Partners be way to go?

A Mass General, Brigham divorce could make sense

WITH GOV. CHARLIE BAKER now having signed off on the legislative deal to avoid the SEIU ballot initiative which would have drastically taken commercial insurance monies away from Partners HealthCare, one wonders just how invested he is in any proposed “real” policy solutions coming out of the newly created special commission to review variation in provider prices.

For those of us hoping this commission can make some cogent recommendations to help reduce some of our health care market dysfunction as evidenced by the unjustified, wide variation in commercial prices paid to health care providers, there is potentially good news that the governor seems to be engaging here. With the new law giving him eight appointees, plus his two cabinet secretaries and two appointments by his party’s House and Senate leaders, those 12 members comprise a majority of the new commission. With that sort of “control,” it would seem that the governor is agreeing to take on some sense of responsibility for the study commission to “succeed”—i.e. produce a set of policy recommendations that both reduce overpayment to some providers while boosting the resource flow for others—particularly a set of community hospitals whose vitality and viability are threatened.

But I hope that the governor might also think about how a set of recommendations that would be enacted into law that could lead to an even bigger prize than price variation reduction itself: the break-up of Partners HealthCare system.

I am not talking about a break-up that would result from federal or state antitrust action. Rather, it would come at the initiative of the clinical and administrative leadership of the Massachusetts General and Brigham and Women’s Hospitals, who, when looking at the results of a new law which, either through government-placed limits, or through constraints on price negotiations between insurers and providers, results in prices paid to Mass General and Brigham and Women’s and their doctors that would be definitively constrained, thus leading these institutions and their leaders to conclude that it would be in their own self- interest to divorce each other.

Why might this happen?  Start with these two current realities.

First, ever since Partners’ creation, Mass General and Brigham and Women’s and their doctors have remained fiercely competitive with each other, and manifested minimal interest in working together as part of an integrated care system. Yes, they need and want to work with other community hospitals and doctors in their referral orbit—but not with each other in any planned way.  Only one common desire drew them together: to be unified in price negotiations with insurers so that each could get paid handsomely and not be threatened by having to lower their prices from competing with each other. Today, in an escalating world of cost control pressure, both hospitals likely feel the pain of the “waste” from supporting Partners’ overhead– money which could be better employed to build their own integrated delivery networks composed of academic and community providers.

Second, with the passage of the 2012 cost containment law and the creation of the Health Policy Commission, the Legislature took an important step to end the laissez-faire era for hospital system growth in Massachusetts. Lawmakers charged the Health Policy Commission with reviewing proposed hospital acquisitions and to protect against any untoward health care spending impacts from these deals. When the law was applied to the proposals put forward by both Mass General (Hallmark) and Brigham and Women’s (South Shore), the facts led the Health Policy Commission to write reports which concluded that these purchases, if allowed to go forward,  would be bad from a cost-growth worry perspective. Beyond the contracted price increases that seemed certain, part of the Health Policy Commission’s concern was that the resultant growth in owned facilities would allow Partners to be even stronger at the negotiating table, likely resulting in further price increases in the future.

Suffolk Superior Court Judge Janet Sanders, who ultimately rejected the settlement agreement Partners negotiated with former attorney general Martha Coakley, agreed with the Health Policy Commission in its worry about Partners further expanding its hospital footprint in Massachusetts.  The net effect of that ruling is that today, Partners is left facing the reality—that at least for Eastern Massachusetts, and quite possibly the whole state—further hospital acquisitions seem legally doomed so long as the system remains intact at its current level of market share.  And even on the physician growth side, the attorney general and the Health Policy Commission will be watching carefully about major expansion plans coming from Partners.

So with these realities already at play, imagine for a moment that the Legislature enacts a law which contains a scheme that effectively reduces the allowed commercial price differential to be no more than some percentage amount above the median price paid to all similar providers. Imagine further that under such a price-constrained system, Mass General and Brigham and Women’s and their doctors and affiliates would get the same prices if they were separated into two competing systems as they would receive if they remain together under the Partners umbrella. It’s a likely scenario because, even on their own, Mass General and the Brigham and their respective network of affiliates would be able to command prices that would be much more than their competitors. The prices would likely be at or above the capped level if they could freely negotiate without constraints.

When you add this new “price cap” reality to the hospitals’ mutual dislike and the Health Policy Commission check on their future expansion if they remain together, this looks more and more like a divorce made in heaven.

Such a break-up could quite possibly allow for the hospital deals that were denied to them to finally go forward as the worry about an even larger Partners demanding even greater price increases would go away if the two became competitor systems. In such a world, Mass General, the Brigham, and their doctors could then be freed up to devote their energies to working with their community affiliates to create truly accountable care delivery systems, with a goal of delivering high-value care to the people and communities that they serve.

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
Hard to find policy solutions where these hospitals, their doctors, and society are all better off. But the current price variation issue and how the new special commission addresses it may just create such an opportunity.

Good luck, Gov. Baker.

Dr. Paul A. Hattis is an associate professor at the Tufts University Medical School and the former consumer advocate commissioner on the Massachusetts Health Policy Commission.