Partners HealthCare reaches tentative deal with state regulators on finances

Partners HealthCare System reached a potential deal on its hospitals' ongoing financial operations  that would allow it to acquire South Shore Hospital and the two hospitals operated by Hallmark Health, according to the Boston Globe.

Under the agreement with Massachusetts Attorney General Martha Coakley, Partners would curb how much it charges for medical services and bar it from obtaining additional physician groups and hospitals for a period of time under a standstill provision.

The agreement, if it comes to fruition, would end years of investigations by state regulators regarding the not-for-profit hospital chain's business practices. The U.S. Department of Justice has kept Partners under scrutiny since 2010, and the deal now on the table is considered a "conduct remedy," according to the Globe.

Partners is the largest hospital system in New England. It recently announced a $425 million bond sale to expand internally, and may even offer its own insurance coverage to patients in order to keep them within its own network of providers.

The terms include tying Partners' price increases to the annual rate of inflation, which is currently less than 2 percent per year, according to the article. Partners would also agree to negotiate different rates for its hospitals with payers, rather than insisting that its community facilities receive the higher rates of its teaching facilities, such as those affiliated with Harvard University School of Medicine. Partners would also agree to close scrutiny by the state attorney general for as long as the next decade.

The South Shore deal was previously rejected by the Massachusetts Health Policy Commission, saying it would drive up prices--something the agreement would address.

"It strikes me as a very fair approach and a very smart approach," Marc Bard, president of the healthcare consulting firm MB2, told the Globe. "The AG's office is saying they want to limit the risks around cost and forming a monopoly but recognize the benefits of a very high-quality hospital system bringing services to a community that could benefit from it."

But Alan Sager, an outspoken Boston University professor of health policy, called such a settlement a "functional compromise" that is political in nature. "If we're relying on competition to hold down healthcare costs, the more competitors the better," he told the Globe. "The harm to the public will accrue more slowly under this deal, but the harm will occur."

To learn more:
- read the Boston Globe article