One of the most fractious hospital acquisition disputes in the country has come back to square one, in a potential win for payers and antitrust advocates.
In Massachusetts, there is a new, stormy chapter in the long saga of the state's largest health system, Partners HealthCare, and its long-sought takeover of more hospitals in the Boston suburbs.
A Superior Court Judge has rejected a state settlement with Partners that would have conditionally approved further acquisitions by the health system.
Partners, the parent organization of the Massachusetts General and Brigham and Women's hospitals, is seeking to acquire the South Shore hospital in Weymouth, two hospitals in the Hallmark Health System located north of the city, and Emerson Hospital in Concord.
The acquisition plans were approved by the former attorney general, Martha Coakley (who lost a bid for Governor) on the condition that Partners keep prices indexed to inflation for six years and cap the size of its physicians groups for five years.
Massachusetts new attorney general, Maura Healey, then announced in her first week in office a plan to block the acquisitions and regulatory settlement.
A few days later, Suffolk Superior Court Judge Janet Sanders rejected the agreement, ruling that it was not in the public interest.
Despite the price concessions, the settlement "would cement Partners' already strong position in the healthcare market and give it the ability, because of this market muscle, to exact higher prices from insurers for the services its providers render," Sanders wrote. The "temporary price caps and other so-called 'conduct-based remedies (do) not reasonably or adequately address the harm that is almost certain to occur as a consequence of the anticompetitive conduct by Partners," she continued.
"In light of the court's ruling, it is now Partners' decision whether to proceed," Healey said. "Our office is prepared to litigate to block this transaction if Partners chooses to move forward."
The nation's top insurance trade group praised the decision as a win for payers and patients in an era of big hospital systems getting larger.
"From coast to coast, consumers are facing the harmful effects of providers merging, higher prices," said Claire Krusing, communications director at America's Health Insurance Plans. "The announcement from Massachusetts is case in point: hospital mergers that harm competition are illegal, and for good reason."
Partners has not yet commented on the decision or revealed it plans.
The health system was created in 1994 through the merger of two of the country's top teaching hospitals, Massachusetts General and Brigham and Women's. Massachusetts new governor, Charlie Baker, was health secretary at the time and approved the merger, but later likened it to "having the grenade that you throw on one end of the boat roll back down and blow up on you when the boat shifts."
Over past two decades Partners became a tour de force, attracting legions of loyal patients and clinicians, and expanding with community hospitals, outpatient facilities, a rehabilitation network and more recently a health plan -- all while earning criticism for using the prestige of Mass General and Brigham to extract consistently high reimbursement from private payers afraid of losing membership and access to Boston's most famous hospitals.
Soon-to-be departing CEO, psychiatrist Gary Gottlieb, MD, has argued that the health system's reimbursement is justified due to its complex, high acuity patients treated at the academic medical centers. Gottlieb has also outlined a vision for Partners to meet the goals of health reform with a population health strategy -- one which, he argued, necessitates Partners' acquisition of suburban hospitals to care for patients more locally.
Partners first proposed the acquisitions in 2012, and agreed to the settlement with Coakley last year -- and then considerable opposition came from competing health systems like Beth Israel Deaconess and Tufts Medical Center, as well as local media pundits.
"We have heard from supporters of our plan and from those against it who suggest we will significantly increase costs if we are permitted to consummate these partnerships," Gottlieb wrote in a letter to the Boston Globe last fall. "The truth is we will not. In our agreement with the Massachusetts attorney general, these hospitals will have individual insurance contracts, with our prices capped at general inflation, for six and a half years. Over this period of time, there is no one who believes that status quo will remain. New payment models and price transparency are emerging; we will lose patients and trusted referral sources if our costs are too high."