Health Policy Commission pans Partners-Mass. Eye & Ear deal

THE STATE HEALTH POLICY COMMISSION is pouring lots of cold water on the proposed acquisition by Partners HealthCare of the Massachusetts Eye & Ear Infirmary, saying the deal would increase health care spending without necessarily improving quality and could make it harder for some patients to access the eye and ear hospital’s specialty services.

The report issued at a Wednesday meeting of the commission, while only a preliminary assessment, is a big blow to Partners, the state’s biggest health provider. Partners has seen expansion plans fail in recent years in the face of opposition from state officials and health care advocates who say it already wields undue clout in the state health care market. Those same concerns are at play in its proposed acquisition of Mass. Eye Ear.

In a report on the proposed deal, the health commission said the deal was likely to result in an increase in annual health care spending of $20.8 million to $61 million per year.

Partners commands among the highest prices of any hospitals in the state, and the commission said it “would likely seek significant hospital rate increases” for Mass. Eye and Ear services if the acquisition goes through.

The range of the estimated annual cost increases from the acquisition represents, at the low end, rate increases if Mass. Eye and Ear charges rise to the level of Partners community hospitals, and, at the high end, the costs if rates match those at Mass. General Hospital and Brigham and Women’s Hospital, the flagship Partners teaching hospitals.

Overall inpatient prices at Partners hospitals for the state’s three largest payers range from 11.5 percent to 34.6 percent higher than those at Mass. Eye and Ear, according to the report. For outpatient services, the report said, Partners overall prices are 6 percent to 105 percent higher than those at Mass. Eye and Ear, depending on the Partners facility.

There is already considerable collaboration between Mass. Eye and Ear and Mass. General Hospital, which sit adjacent to each other along the Charles River in Boston. Mass. Eye & Ear provides all ophthalmology and otolaryngology care for MGH patients. Under the acquisition, Partners said Mass. Eye and Ear would become the system-wide provider of such care for its network.

Don Berwick, a member of the commission, wondered whether the acquisition was necessary to carry out that goal, given the contracting arrangements already in place between the two entities.

Partners and Mass. Eye and Ear say the acquisition would lead to operational efficiencies in several areas, but the report says they have not committed to using these to reduce prices or otherwise trim costs for payers or consumers. The commission staff estimated those efficiencies could, after several years, save about $20 million per year.

Commission member David Cutler, a health care economist at Harvard, questioned why Partners couldn’t carry out improvements it wants to make at its facilities using the $20 million in savings without raising prices. “We want cost savings but also higher prices,” he said, seems to be the message from Partners.

“David, welcome to health care in America,” said commission chairman Stuart Altman. “We’ve been saving money for the last 50 years.”

The report also raised concerns about whether the takeover by Partners could harm patient access to services provided by Mass. Eye and Ear. If Mass. Eye and Ear obtained new contracts with Partners’ higher pricing schedule, patients in tiered and limited network products and Medicaid managed care plans “may face barriers to accessing [Mass. Eye and Ear’s] specialty services,” said the report.

Today’s release of the report triggers a 30-day comment period after which the commission will meet to issue a final finding.

A spokesman for Partners said the health network would respond during that time to the concerns that the report raises.

“We will review the details contained within the HPC’s preliminary report and work with them to address any concerns they have,” said Richard Copp, in a statement. “This partnership will greatly strengthen the clinical and scientific relationships between our organizations and will help make Mass. Eye and Ear services and research accessible to a broader population of patients, further improving the quality of life for thousands of individuals and families in Massachusetts.”

Jennifer Street, vice president for communications and planning at Mass. Eye & Ear, said in a statement that the hospital looks “forward to reading the full preliminary report and better understanding the HPC’s analysis and conclusions. We remain steadfast in our belief that for Mass. Eye and Ear to join a system is what’s best for all patients who suffer with vision and hearing loss and diseases of the eyes, ears, nose, and throat.”

Expansion efforts by Partners have faced considerable resistance in recent years from critics who say the network’s size already lets it extract higher prices than other providers receive, something that further acquisitions would only compound.

In 2015, in face of objections from the Health Policy Commission and Attorney General Maura Healey, Partners abandoned plans to acquire South Shore Hospital in Weymouth and Hallmark Health System in Medford.

The Health Policy Commission was established in 2012 as part of a broad health care cost bill. It does not have authority to block a merger or acquisition or impose conditions on a deal, but it can make a referral to the attorney general, who can take further action, something the preliminary report seems to anticipate.

“Based on these findings, this transaction may warrant further review and referral to the Massachusetts Attorney General’s Office,” says the report.