Partners surrenders

PARTNERS HEALTHCARE HAS agreed to end its controversial pursuit of South Shore Hospital and will hold off on acquiring two Hallmark Health hospitals on the North Shore for the time being less than three weeks after a Superior Court judge delivered a crippling blow to the health care giant’s vast expansion plans.

Lawyers for Partners, in conjunction with Attorney General Maura Healey, on Tuesday filed a stipulation to dismiss a suit launched by then-Attorney General Martha Coakley that had resulted in a consent decree that would have allowed the Brobdingnagian health care conglomerate to acquire the hospitals while agreeing to some temporary pricing and growth restrictions.

Suffolk Superior Court Judge Janet Sanders, citing the overwhelming opposition to the purchase filed in public comments by competitors, economists, and consumer advocates, rejected the accord last month and Healey had vowed to file an antitrust suit if Partners went ahead with the acquisition. Partners had entered into discussions last week with Healey’s office and on Tuesday, she praised the organization for stepping back.

“We appreciate the thoughtful process that Partners engaged in while making this important decision, and believe it is the right choice for Partners and the Commonwealth,” Healey said in a statement. “We are thankful for the valuable input that was provided by the health care community throughout this process to help reach this result.”

Partners CEO Gary Gottlieb, who is stepping down this summer, also acknowledged the force of public opposition to the planned merger while defending the organization’s motivation for pursuing the purchase in the first place. He said even though the efforts to merge have ended, the clinical associations between Partners and South Shore will continue.

“We have listened and heard the public concerns, and in conjunction with the leadership at SSH, we have decided that the best approach is not to proceed with our plan to bring SSH into Partners,” Gottlieb wrote to Partners employees.  “There were scores of people who spoke generously in favor of our plan.  I also want to thank all the people at Partners for their extraordinary diligence, working for years to try to bring this idea to reality; our goal was to build with SSH a long-lasting health care partnership that would have benefited the people of the South Shore for generations to come.”

Richard Aubut, president and CEO of South Shore, said while he still thinks the merger would have been in the best interests of the region, he said after discussions with the hospital’s Board of Directors the decision was made that the cost of fighting it in court would have been prohibitive.

“The prospect of costly and prolonged litigation to advance the merger would not be in the best interests of our patients, our providers, our colleagues and our community,” he said in a statement. “It is profoundly disappointing that the people of the South Shore have been denied the opportunity to benefit from what our merger with Partners would have made possible for them.”

The filing ends a three-year odyssey by Partners to expand its footprint both north and south of its core in Boston by purchasing South Shore and the two Hallmark hospitals in Melrose and Medford. Coakley had initially tried to stop the agreement but then entered into the consent decree in an effort to set some reins on the growth of Partners, which dominates the health care field in Massachusetts.

Among the stipulations in the deal negotiated by Coakley was an agreement by Partners to cap price increases at no more than the rate of inflation for 6 1/2 years on all Partners contracts with insurers. It also required South Shore Hospital to limit its price increases to no more than the rate of inflation for five years. Other terms would have allowed insurers to negotiate rates with individual parts of the hospital chain rather than all-or-nothing contracts with the entire system; bar any expansion by Partners for seven years; and limit the hospital giant’s acquisitions of physician groups for five years.

But now that the deal has been struck down and the suit dismissed, those potential restrictions are no longer in play. Coakley had insisted the outcome of taking the suit through to trial was risky and the negotiated settlement offered the best chance to place restrictions on the growth of the most dominant health care provider in Massachusetts, with 10 hospitals and thousands of physicians under its umbrella.

But Healey, just days after being sworn into office, filed a brief with Sanders stating her opposition to the agreement, though she did not ask the judge to reject it, leaving that decision to the court. Healey echoed many of the same concerns that Sanders had expressed about cost as well as concerns by a consortium of hospitals, the state’s Health Policy Commission, and the Center for Health Information and Analysis that such expansion would lead to reduced competition and funnel many patients to Partners’ affiliated facilities.

Both Healey and Gottlieb said the deal to acquire Hallmark could move forward after federal regulatory obligations are complete. But Healey said the process to contain costs and expand competition is far from over even though this battle was ended.

“Today’s decision does not change the fact that the work to make health care more affordable remains a major challenge ahead,” she said in the statement. “Our office is committed to tackling that challenge, and we look forward to working cooperatively with all stakeholders on this important issue for our families, businesses, and Massachusetts.”