BOSTON — A new state commission has chosen the proposed merger of the large Partners Healthcare System and with the smaller South Shore Hospital for its first review.
The Massachusetts Health Policy Commission, established in the 2012 health care cost control law, has announced plans to examine the potential merger’s effects on costs and the health care market.
Founded by Brigham and Women’s Hospital and Massachusetts General Hospital, Partners already includes community and specialty hospitals, a managed care organization, and community health centers and is the state’s largest private employer, with 60,000 employees. South Shore Hospital was founded in 1922, has 378 licensed acute care hospital beds, 77 bassinets for newborns, and 3,900 employees.
In a statement, commission Executive Director David Seltz said the panel is committed to conducting its review “on consumers’ behalf in a timely and thorough manner.” The commission, which is charged in part with helping the state keep health care cost growth in line with economic growth, cited high costs at Partners and the Weymouth community hospital as factors that triggered the decision to launch a review.
Next steps for the review will be discussed at a commission board meeting on June 19, with commissioners scheduled to vote on whether to continue with the review after hearing from Seltz.
The commission is the same body that has been set up to provide up to $135 million through a “distressed hospital fund” – a status that Lahey Health has agreed to seek to secure grants for Gloucetser’s Addison Gilbert Hospital, as reported by the Times in March.
While the term “distressed” raised some red flags on Cape Ann among those concerned about Addison Gilbert’s long-term future, Alan Sager, a professor at Boston University’s School of Public Health, said the fund has simply been created to address the fact that the number of acute care hospitals has been reduced by one half to about 65 since 1993.
“This is the latest and most formalized program to help hospitals that are thought to be needed but are needy,” Sager, who has studied and commented on the generation-long effort of Cape Ann to keep Addison Gilbert, said at the time. The newly formed, $1.5 billion Lahey Health became Addison Gilbert’s parent corporation through its merger last year with Beverly-based Northeast Health System, also in 2012.
The state last year created the Health Policy Commission as part of a major initiative in health care cost containment; as part of the legislation, the commission was assigned to create the “distressed hospital fund” of a reported $135 million, obtained via a one-time assessment of the insurers and the major health care systems.
According to the commission, the review of the Partners-South Shore proposal “will include analyzing information from the parties and other market participants, developing a preliminary report, and issuing a final report,” with the proposed transaction not eligible to be completed until 30 days after the final report is issued. If it chooses, the commission may refer findings to the state attorney general for action on behalf of health care consumers
In a commission filing, Partners Vice President Brent Henry wrote that the affiliation with South Shore “will enhance clinical care and is intended to yield economic and operational efficiencies” that are “expected to result in the delivery of high quality, cost effective health care to all patients served by the parties in Southeastern Massachusetts, expand access to needed health care services, and should contribute, over time, to moderating the rate of growth in health care expenditures for the benefit of patients and employers.”
In a separate filing, Richard Aubut, president of South Shore Hospital, used the exact same language to describe the anticipated impact of the merger.
Henry also noted in his filing that Partners — whose affiliates also include doctors within the Cape Ann Medical Center in Gloucester’s Blackburn Industrial Park —has executed agreements in place to acquire Cooley Dickinson Hospital in Northampton and the Hallmark Health System, which will build on the system’s membership and affiliations across Massachusetts.
During remarks last week at a Massachusetts Health Information Management Association event, House Health Care Financing Committee Chairman Rep. Steven Walsh, D-Lynn, speculated that, in five years, there may be 12 health care entities left in Massachusetts following this period of consolidation.
“The issue that we have to be vigilant about is that consolidation in the Northeast, unlike anyplace else in the country, drives costs up,” Walsh said. He continued: “If the community hospitals go out of business we’re in a lot of trouble. Because even though we’re seeing consolidation, at some point Boston teaching hospitals cannot handle the capacity that would emerge on their doorstep if we lost Emerson and Melrose-Wakefield and Lawrence Memorial and Winchester and on up.”
“We have to watch this whole market move and see what happens and we have to make sure that consumers are getting the better bang for their buck,” Walsh said. “Because if your son or daughter sprains their ankle playing street hockey you don’t want to have to drive them 30 miles to the most expensive teaching hospital in the world to get that checked. And that’s what we’d be on the verge of if we don’t find a way to make sure that our community hospitals can survive and then thrive.”
Partners spokesman Rich Copp said Partners anticipated the commission’s review.
“This proposed affiliation between Partners, Brigham and Women’s Hospital and South Shore Hospital is going to offer patients in southeastern Massachusetts more affordable and accessible health care closer to home, in lower cost community settings,” he said.