Agreement Allows But Limits Partners Growth, Caps Prices To 2020

This just in from the Associated Press:

BOSTON - Attorney General Martha Coakley has reached an agreement with Partners HealthCare, the largest hospital and physicians' network in Massachusetts, that will allow it to acquire South Shore Hospital and Hallmark Health Systems.
Coakley says the deal will also fundamentally alter the negotiating power of Partners for the next decade and help control health care costs.
Monday's agreement must be finalized by the parties by June 16 and approved by a court before taking effect.
The deal includes capping health costs at the rate of inflation across the entire Partners network through 2020.

And this from the Health Policy Commission

Attorney General Martha Coakley’s Agreement in Principle with Partners HealthCare

Statement of Dr. Stuart H. Altman, Chair, Massachusetts Health Policy Commission:

“I am pleased the comprehensive settlement described by the Attorney General addresses concerns raised in our recent cost and market impact review report. Our objective, data-driven review, referred to the AG in February, found that the acquisition of South Shore Hospital by Partners HealthCare System will increase health care spending, likely reduce market competition, and result in increased premiums for employers and consumers. I look forward to reviewing a final agreement, but I believe the AG and the parties have taken our work into account in developing the conditions under which this transaction can move forward. The HPC will continue to assess the impact of provider market changes and work with the AG to foster a more competitive health system for the benefit of Massachusetts consumers and businesses.”

A message from Partners Healthcare chief Dr. Gary Gottlieb lays out some details:

Dear Colleagues,

I am writing to share some important news concerning an agreement in principle that Partners HealthCare has reached today with Massachusetts Attorney General Martha Coakley. We have been engaged in discussions with her office related to our mergers with South Shore Hospital (SSH), Hallmark Health System (HHS) and Harbor Medical Associates (HMA). The regulators have also been reviewing our contracts with non-employed physicians to understand the extent of their partnership with us.

This is a longer than usual message, because we want to provide you with the context and the background to put in the proper perspective our leadership team’s decision. Thank you for taking the time to read through the details.

Under the agreement, we will be able to move forward with our plans to merge with SSH, HHS and HMA and continue to contract on behalf of all of our doctors who are in our physician hospital organizations (PHOs) and employed/leased by us. Our priority throughout these discussions has been to protect our mission and the extraordinary care that you, our doctors, nurses, researchers and care teams provide to our patients.

We reached this agreement with the regulators so we could carry forward with our plans to offer the highest quality care, whenever possible, closer to the homes of our patients and their families in a lower cost community-based setting. As leaders in health care, we are also addressing the key issues of access and affordability:

· In order to improve care coordination for our patients, it is essential that primary care physicians and community hospitals are clinically and financially tied into our system. That is the backbone of our decision to affiliate with SSH, HHS and HMA and to preserve our ability to contract on behalf of our PHOs. This connection will help promote a more effective and efficient pathway for our patients, across our continuum of care, from our academic medical centers, to our rehabilitation and long-term care as well as behavioral health and other specialty services.

· In order to achieve our goal, we will need to care for entire populations of patients and invest in services that will improve access for them and will help them navigate the system so they can make the best possible decisions about their care. This initiative called Population Health Management sets the foundation for all of our affiliations and it allows us to carry out the mandate of the new state health care reform law (known as Chapter 224) and the federal Affordable Care Act.

· Finally, like all the communities we serve, we made a commitment to SSH, HHS and HMA to work with them to bring the best care possible to their patients and their families.

We want to share with you the details of the agreement:

· We will give commercial insurance companies the option to separately contract for our teaching hospitals (BWH, MGH, McLean, Spaulding) as one group, and for community hospitals as another, for 10 years. SSH and HHS may remain separate components for seven years and then will become part of the community hospital group;

· We will no longer negotiate commercial insurance contracts on behalf of physicians who are not employed/leased by us unless they are members of our own PHOs;

· We will guarantee that our contracts with commercial insurers will increase at a rate no higher than general inflation for a period of 6 1/2 years and our increase in total medical expense (TME) for our HMO contracts will not be greater than the growth cap set by the Health Policy Commission;

· This price growth guarantee (referenced above) will also collectively apply to South Shore Hospital, its PHO and Harbor Medical Associates;

· We can restore our community physician network to the size it was in 2012, adding up to 550 doctors (outside of metro Boston) and include an additional 40 doctors in year 4 and 5 of the agreement;

· We will not acquire any hospital in eastern Massachusetts (including Worcester County) for 7 years without prior approval from the Attorney General. There is an exception for Emerson Hospital and its PHO, current Partners affiliates, in this agreement.

The challenges we will face with these conditions are not new to our organization. We will need to find more savings and efficiencies; we have done a lot of good work already taking out more than $300 million in costs out of our system. It has been clear that going forward we will need to operate within a tighter budget envelope. Society and the marketplace are calling on us to do so. This means that there will be trade-offs and decisions to make and we will need to manage them, carefully and thoughtfully.

With the depth and breadth of our talented teams, more than 60,000 of us standing together as one, we can provide the leadership to define a direction for the future that will benefit the communities we serve in the most effective way. We are in a time of change, and your dedication in support of our mission will help guide our pathway going forward. We will build on our vision to continue to deliver the highest quality care that is affordable and accessible and nurtures the needs of our patients and their families whenever they call on us.

Thank you,

Gary Gottlieb, M.D.

Partners President and CEO

Readers, thoughts? Please stay tuned for reporting from WBUR's Martha Bebinger.