A story in today's Boston Globe again misconstrues the business plan of Steward Health Care System in acquiring a physician group that was part of the Partners Healthcare System.
Compass Medical includes 90 doctors in eight offices between Braintree and Taunton, and over time, doctors there probably will refer more of their thousands of patients to nearby Steward-owned community hospitals for care, including Quincy Medical Center, Good Samaritan Medical Center in Brockton, and Morton Hospital in Taunton.
The change is a loss for Partners, a powerful provider network that includes Massachusetts General and Brigham and Women’s hospitals, which has been affiliated with Compass for 16 years.
The Steward plan does not divert patients from PHS hospitals. If anything, it is an attempt to divert them from the other community hospitals in those regions, like Milton and Brockton Hospital. PHS does not have community hospitals in that region. Remember, too, that Steward is using MGH as its tertiary center.
This whole thing, though, is really part of the usual private equity strategy during the years leading up to an IPO or other flip of the Steward network. The name of the game is to show investors a pattern of market share and revenue growth. The profitability of such moves is secondary, in the investment world, to an increase in scale. When viewed that way, it doesn't matter what Steward pays to acquire these physician groups for just a few years: There is no way, though, that the incumbents can match the acquisition price, as they have to plan to stay in business for years to come.