The Codcast: A devilish health care merger

Two of the state’s leading health care analysts say they aren’t sure whether creating a powerful alternative to Partners HealthCare will reduce health care costs in Massachusetts or increase them.

“It’s the devil you know versus the devil you don’t know,” said John E. McDonough, a professor of public health practice at the TH Chan School of Public Health at Harvard University. “Are we better off having one Partners or two Partners?”

Paul Hattis, an associate professor of public health and community medicine at Tufts Medical School, said he also has mixed feelings about the “fight fire with fire” approach advocated by proponents of a merger between Beth Israel Deaconess Medical Center of Boston, Lahey Health of Burlington, New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, and Anna Jaques Hospital in Newburyport. The proposed health care goliath currently goes by the name of NewCo.

As Hattis and McDonough explain in this week’s CommonWealth Codcast, there is uncertainty over whether the new hospital system will use its clout to take business away from Partners and force a price war that will lead to lower health care costs overall or whether NewCo will destabilize the remaining players in the market and attempt to use its clout to boost revenues by raising its prices.

According to McDonough, Partners controls nearly 27 percent of the state’s inpatient and outpatient hospital market. NewCo would represent about 25 percent of the market, he said, giving the two systems together just over half of the market. In terms of revenue, however, there remains a vast disparity between Partners and its would-be challenger. Partners rakes in about $13 billion in annual revenue, compared to $5 billion for NewCo using 2016 data.

McDonough said most employers currently don’t feel they can offer health insurance plans without access to the prestigious Partners network, which includes Brigham and Women’s and Massachusetts General. The big question is whether a high quality, lower cost network can change the mindset of employers and their employees. He noted Massachusetts has the fourth highest commercial health insurance rates in the country, but the standard individual health plans offered by the state’s Health Connector are the second lowest in terms of price in the nation – in part because Partners isn’t part of the covered network.

Still, McDonough isn’t convinced NewCo will end up benefiting the end users of health care. “There’s very little evidence in these kinds of mergers, acquisitions, consolidations that the savings in any way flow back to patients or employers,” he said.

Hattis also pointed out that Michael Wagner, the CEO of Tufts Medical Center, thinks NewCo will take commercial business away from non-Partners hospitals and leave those facilities weakened, unable to use commercial business to subsidize Medicaid and Medicare care. The result could be more instability and concentration in the marketplace, themes Hattis raised in an op-ed article for CommonWealth earlier this year.

One questionmark is whether NewCo will be a true merger of the participating hospitals, the way Beth Israel and Deaconess combined in 1996, or whether it will be more of an affiliation, the way Brigham and Women’s and Massachusetts General combined under the Partners brand in 1994. So far, the indications from NewCo officials are that the combined company will be more of an affiliation.

Pressed to give a thumbs-up or thumbs-down on the merger, both Hattis and McDonough said they would wait for a review being conducted by the Health Policy Commission before deciding. McDonough acknowledged the verdict from the commission isn’t likely to be straightforward because so many variables are involved.

McDonough said the wisest course may be to turn back the clock on the 1994 merger of Brigham and Women’s and Massachusetts General. “The smartest thing to do right now would be to divide Partners in half,” he said.

BRUCE MOHL


BEACON HILL

Gov. Charlie Baker signed criminal justice reform legislation on Friday that puts Massachusetts in the middle of a national wave of rethinking tough-on-crime laws from the 1980s and 1990s — but he focused his remarks at the bill signing instead on the handful of new sanctions included in the bill. (CommonWealth)

A Republican budget amendment would block state aid to Massachusetts sanctuary cities and towns. (Eagle-Tribune)

In the wake of last week’s killing of Yarmouth police officer Sean Gannon, a Herald editorial laments the fact that “there is no stomach for capital punishment on Beacon Hill.”

Legal experts question whether non-disclosure agreements in the public sector, such as those the House of Representatives executed in recent years, are legally enforceable. (Governing)

MUNICIPAL MATTERS

The New York Times real estate section raves (mostly) about Berkshire County, prompting an editorial in the Berkshire Eagle.

A point-in-time count on the Cape and islands found 358 homeless people, up about 10 percent over last year’s 324. (Cape Cod Times)

Gardner is seeking a $700,000 Proposition 2½  override to avoid school layoffs. (Telegram & Gazette)

WASHINGTON/NATIONAL/INTERNATIONAL

It turns out Fox News talk show host Sean Hannity, who is perhaps President Trump’s biggest on air backer, is also a client of Trump lawyer Michael Cohen. (New York Times)

“Not all my choices were good,” Trump says about his cabinet, which has seen two members exit under clouds while some of those remaining are the subjects of controversy. (Boston Globe)

ELECTIONS

Bob Massie says in the Democratic primary race for governor he is the only true progressive. (CommonWealth)

David Bernstein provides a rundown of political fundraising in the races for US Senate and the 7th and 3d congressional contests. (WGBH)

Edward M. Murphy says the Democrats have a lot to learn from President Trump. (CommonWealth)

Columnist Peter Lucas said Republican-in-name-only Gov. Charlie Baker will win the Republican Party convention and could probably win the Democratic one as well. (Lowell Sun)

Voters in West Bridgewater pass a non-binding referendum banning all marijuana shops in town; the final decision, however, rests with Town Meeting. (The Enterprise)

BUSINESS/ECONOMY

Bertucci’s filed a Chapter 11 bankruptcy and plans to sell the business for about $20 million. (Telegram & Gazette) The Northboro-based chain closed 15 restaurants, including the one at Silver City Galleria in Taunton. (South Coast Today) The other Massachusetts closures are in Amherst, Longmeadow, West Springfield, Marlboro, and Wayland. (MassLive)

Mia Alvarado and Michael Weekes say the state’s human service workers are woefully underpaid and back legislation to help tem with student loans. (CommonWealth)

Trade-secret disputes are soaring, as illustrated by a recent lawsuit by a Cambridge drug firm against a Watertown rival. (Boston Globe)

EDUCATION

The inspirational talks at Bunker Hill Community College are not cheap. (CommonWealth)

Andover volleyball coach E.J. Perry was placed on leave after he benched two players for refusing to go along with a substitution he called. (Eagle-Tribune)

HEALTH/HEALTH CARE

Lowell is the late municipality to file suit against opioid manufacturers alleging misleading promotion of their drugs. (Boston Herald)

ENERGY/ENVIRONMENT

Salem Harbor Footprint severed ties with Iberdrola, its lead contractor, for failing to complete the natural gas power plant on time. Iberdrola is also the parent company of the firm that won the Massachusetts clean energy procurement. (Salem News)

CASINOS/MARIJUANA

Medical marijuana companies that haven’t opened yet are pursuing priority status to sell recreational pot. (MassLive)

CRIMINAL JUSTICE/COURTS

The Yarmouth Police Department said in a Facebook post about slain officer Sean Gannon, “the Massachusetts Criminal Justice System has let us down.” Gannon’s wake will be held today and his funeral will take place tomorrow. (Boston Globe)

The Cambridge police commissioner defended his officers who are facing strong criticism over the handling of a distressed and naked Harvard student who was apparently hallucinating on drugs. (Boston Globe) A group of students from the college’s Undergraduate Council criticized Harvard its “failure” to keep students safe. (The Harvard Crimson) A Globe editorial says the case merits further scrutiny by the city as well as state officials.

Former state senator Brian Joyce will be in federal court on Friday arguing against prosecutors’ attempt to have the lawyer representing him in his multi-count corruption trial thrown off the case. The government says Howard Cooper submitted false statements to the state Ethics Commission on Joyce’s behalf and could therefore be a witness in the trial. (Patriot Ledger)

MEDIA

Wellesley College professor Frank Bidart won the Pulitzer Prize for Poetry. (Boston Globe) Other winners include the New York Times and The New Yorker for pieces on Harvey Weinstein as well as Kendrick Lamar for his album “Damn.” The Boston Globe was a finalist in the local reporting category for its series on Boston’s poor history of race relations. (Poynter)