Closing the barn door after . . .

The State House News reports that the Massachusetts Health Policy Commission "has chosen the proposed merger of the large Partners Healthcare System and with the smaller South Shore Hospital for its first review . . . to examine the merger’s effects on costs and the health care market."

The HPC does not have veto authority over the merger.  It can delay it slightly, as the transaction cannot proceed until 30 days after its report is issued. "If it chooses, the commission may refer findings to the state attorney general for action on behalf of health care consumers."

What do the parties to the merger say?

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.

To understand this fully, we need to understand that South Shore has been a vassal of Partners for years, with extremely close clinical relationships and referral patterns. The Patriot Ledger reported: 

Sarah Darcy, spokeswoman for South Shore Hospital, said the two hospitals have worked together since 2004 on providing a wide range of medical and surgical care. Among them are the Dana-Farber/Brigham and Women’s Cancer Center, the Breast Care Center, and a Harvard Medical School-affiliated surgical residency program at South Shore Hospital.

(See here for more detail with regard to cancer care, and here for the very close residency program for obstetrics and gynecology.)  Do you think it is a coincidence that it is only with the passage of the so-called "cost containment legislation" last summer that a formal merger is proceeding?  That legislation provides the framework for "state action" that will insulate Partners from future anti-trust action in this transaction.

Why?  Because the parties will be able to demonstrate "economic and operational efficiencies."  Consider the expansion of the Partners' EHR system, purchasing, cost of capital, and the like to this community hospital. At a small marginal cost, SSH will accrue major marginal benefits.  Expect Partners also to argue that consolidation will result in better care management for SSH's patients.

Who is going to make a counter case before the HPC and the AG?  No other hospital system will attempt to intervene, for fear that whatever metrics it would propose for the HPC or AG to slow down the PHS-SSH merger would also be used to slow down growth of their ACOs.

No, the market power card is no longer available to be played in Massachusetts.  Well done, Partners.

The only hope for consumers in the state is real-time transparency of the actual prices paid for care in the various health care systems, accompanied by real-time quality data.  Then, people would see that they are paying extra for little or nothing by insisting on insurance products with PHS doctors and hospitals.  Then, insurance products with lower-cost limited networks with equal or higher quality might have a chance to grow.