Restraining Partners? Rampant Speculation On A Deal In The Works

What’s up with that Partners-South Shore deal?

This question has come up in every conversation about hospitals in Massachusetts for the past three to four months, at least.  It’s important because the final resolution will be a benchmark for future hospital mergers, acquisitions and partnerships in Massachusetts and beyond. And it may finally address complaints that Partners Healthcare hospitals and doctors are paid more, in some cases much more, than most of their competitors.

If you’ve (understandably) lost track, here’s a recap:

partnersPartners announced plans to acquire South Shore Hospitals in June 2012.

The state’s Health Policy Commission concluded the deal would increase costs $23-$26 million a year.

Partners countered, saying that adding South Shore to its network, currently the largest in the state, would save $27 million a year.

The commission stuck to its original findings and sent a report to Attorney General Martha Coakley.  She, along with the U.S. Department of Justice, have been looking at whether Partners exploits its size and market clout to drive up health care prices and all of our premiums.

There are lots of theories about why we haven’t heard anything since Coakley acknowledged in March that she was in talks with Partners and South Shore.  Is there an impasse?  Are federal regulators clogging up the works?  What kind of pressure is Coakley (who is also running for governor) facing? I’ve heard all kinds of theories. Feel free to add yours below.

Coakley told the South Shore Chamber of Commerce last week that she expects to complete her review of the deal in a month or two.

Working with the Department of Justice, Coakley could sue to try and block Partners from bringing South Shore into its system.

But a deal that would limit Partners clout seems more likely. So what should it include?

Here’s where my random conversations with doctors, hospital executives and patients gets really interesting. The virtual water cooler chatter includes these possible scenarios:

1. Partners can add South Shore — and that’s it.  No further expansion for, say, five years or so (the time frame varies from three to 10 years). Keep in mind, Partners has already announced plans to acquire two North Shore hospitals after the South Shore deal is done.

2. Partners can add South Shore, but it must sell off another hospital of equivalent size or scope.

3. Partners can add South Shore, but it has to agree to a cap on the number of doctors either employed by the network or who refer patients to the network.

4. Partners can add South Shore, but it can’t add any new physicians.  If it adds the South Shore Physicians group, Partners must end it’s affiliation with an equivalent number of doctors already in the network.

5. Partners has to agree to some major cut in reimbursement rates or a new cap, not just for South Shore, but for its high priced hospitals. Partners will remind you that it already, voluntarily, trimmed its rate of increase from 5-6 percent a year to 2-3 percent.  But at a time when some community hospitals are getting just 1 percent more a year, or no increase, the disparity between them and Partners will grow, not shrink.

O.K, so there’s a summary of the cheat sheet I’m putting together for that late Friday afternoon, sooner or later, when I expect to have to unravel a complex document quickly. What would you add to the list? Is it unusual to be even thinking about this kind of resolution to an anti-trust investigation? Thanks, in advance, for your insights.

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  • Amy Lischko

    How about they put their estimated savings in escrow and if they save that amount they can keep some small percent say 5-10% and the rest goes to the State’s rainy day fund. If they don’t save it, the states keeps it all.