Judge Wrestles With Partners Deal

Suffolk Superior Court Judge Janet Sanders is wrestling with a decision that will shape the health care industry in Massachusetts for at least a decade.

On the face of it, Sanders is reviewing a customary settlement in an anti-trust case. Partners HealthCare and Attorney General Martha Coakley reached an agreement to avoid a lengthy court fight. The agreement would allow Partners to acquire at least three hospitals and hire more physicians in exchange for limits on price increases and unchecked expansion through the next decade.

"[Sanders] has two choices: either enter it or not enter it," says Partners attorney Bruce Sokler of Mintz Levin. "It's not like she can rewrite the decree or decide what the right answer is for health care. There are other forums for that in the commonwealth."

But this case, Commonwealth of Massachusetts v. Partners HealthCare et al, is not proceeding like any routine anti-trust matter.

For one thing:

"This is the first time I've ever had this kind of opposition to a consent decree," Sanders said during a hearing Monday.

She mentioned public comments filed by economists, health insurers, consumer advocates and the state’s Health Policy Commission that suggest health care spending will increase for everyone if more hospitals and physicians are paid Partners' rates.

"I do have some very substantial concerns," Sanders said, "about the impact the settlement would have on Massachusetts or the health care costs for all Massachusetts citizens. And I think this is the area that is the primary focus in my determination as to whether this is in the public interest."

Sanders said that view may have been a little one-sided because she hadn't had time to digest the rebuttals from Partners and Coakley to these public concerns. The AG's office seems confident that when Sanders does study their response, she will see the merits of the Partners agreement.

“We believe the court, after fully reviewing our comprehensive response, will appreciate that the immediate and broad remedies of the consent judgment are better than uncertain and prolonged litigation,” said Brad Puffer, spokesman for the AG.

But Sanders raised a number of questions:

How should she evaluate evidence from experts who say this agreement will increase costs against Partners' claims that it will save money? That question was left for the next hearing on Nov. 10.

How should she factor in the reality that "Partners is this major player, the largest by far in the state"?

Several comments argue that Partners has "the market power to charge way above what everybody else does and it has to be stopped — I don't know that I can just ignore that," Sanders said.

"Those are facts," said Deputy Attorney General Chris Barry-Smith, "but they are not facts for the court's consideration in gauging public interest in this deal because they are not in the complaint."

This complaint stems from Partners' proposed acquisition of three hospitals.

"If this consent judgement is viewed through the lens of, 'Does it solve all of the health care problems in Massachusetts, or even does it solve all of those at Partners?' I'm quite certain the answer will be unsatisfactory," Barry-Smith said.

Sanders told attorneys for the AG and Partners that she is also worried about the mechanics of the deal — about whether is could be enforced. Partners has agreed to keep price increases in line with general inflation. Someone in the AG’s office would monitor Partners' multibillion-dollar budget to make sure the network is not exceeding that cap, a task Sanders expects will be difficult.

"It’s not like we’re pricing widgets here," Sanders said. "We’re talking about a very complex system of pricing."

If there’s a future dispute between Partners and the AG’s monitor, it would end up back in Sanders court.

"I'm very concerned as [to] this court's role in enforcing this over the next 10 years," Sanders said.

The judge cited an argument raised by the American Antitrust Institute, whose general counsel Richard Brunell says this decree "will be ineffective and the price caps will be evaded."

Brunell says federal authorities generally avoid settlements that require on-going monitoring because they are too much work for the courts. The more common action is to block mergers or to negotiate a trade that keeps competition in balance.

The AG's office will have a chance in November to explain how it reached the current agreement with Partners. It's not clear when Sanders will issue a decision. An attorney for South Shore Hospital says his client, as well as many business and civil leaders in the area, are anxious to close a deal with Partners. An attorney representing the two other hospitals Partners plans to acquire, Melrose-Wakefield and Lawrence Memorial, said his network is losing more than $1 million a month while it waits to join Partners.

Sanders mentioned, in passing, that the next hearing will take place after the Nov. 4 election in which Coakley is a candidate for governor. The deal she struck with Partners has become a political liability in her run against Republican Charlie Baker.