Massachusetts Regulators Deny Partners Acquisition Citing Exaggerated Population Health Savings

2014-02-20_17-13-42

The Massachusetts Health Policy Committee today voted 9-0 against Partners Healthcare’s planned acquisition of South Shore Hospital, a 378-bed non-profit hospital located 15 miles south of Boston. The committee, which was formed in 2012 to oversee health reform in the commonwealth, based their recommendation on what they called exaggerated and unlikely cost-savings projections tied to the expansion of Partners’ population health program.

Because Partners and South Shore Hospital were both already the most expensive care delivery options within their respective markets, the committee concluded that a merger would only reduce competition and drive up healthcare costs. The committee suggested that increased prices would lead to a $23 to $26 million annual increase in regional healthcare spending, while population health associated savings would only reduce spending by $6 million, at most.

The committee concludes, “Overall, based on the evidence the parties provided, increases in spending are anticipated to far exceed potential cost savings from expanding Partners’ existing PHM initiatives into the South Shore region.”

The committee also concluded that because Partners and South Shore both have higher than average quality scores and little variation in quality performance between them, that any quality improvements resulting from the merger were unlikely to be significant.

Partners and South Shore vehemently disagreed with the findings,  making the argument that by combining forces and implementing a region wide population health program quality could be further increased and costs could be driven downward.

The flaw that partners points to in this analysis is that the committee looked at Partners ACO performance, and calculated the probable additional savings that would result if the program were expanded to include the South Shore region. The problem Partners sees with this is that it fails to account for potential savings in the non-Medicare population, which is more than 50 percent of the case mix in the area.

In their rebuttal, Partners explains, “Partners has a proven track record for generating
efficiency gains of this kind. Since 2009, healthcare spending associated with inpatient care at the Brigham and Women’s Hospital has been reduced by approximately $83 million
through an initiative to shift secondary care volume from the BWH to the Faulkner Hospital, a Partners community hospital. Partners seeks to replicate this success at SSH.”

Partners’ population health proposal describes a fully integrated network that crosses practice, specialty, and hospital services and utilizes patient portals, virtual visits, same day appointments and extended hours clinics, shared decision-making, high risk population management, and EHR-based clinical decision support tools to keep patients out of the hospital and appropriately cared for.


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