public comments on partners healthcare deal

8/12/2019 Public Comments On Partners HealthCare Deal

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HOUSE OF REPRESENTATIVESSTATE HOUSE ROOM 23 BOSTON 02133-1054

COMMITTEES:REVENUE

BONDING, CAPITAL EXPENDITURESAND STATE ASSETSPERSONNEL AND ADMINISTRATION

JAMES M . CANTWELLSTATE REPRESENTATIVE4T PLYMOUTH DISTRICT

MARSHFIELD SCITUATETEL. (617) 722-2140FAX. (617) 722 0836

[email protected] CO CHAIR

COASTAL CAUCUS

Attn: Antitrust DivisionOffice of Attorney GeneralOne Ashburton Place, 18th FloorBoston, MA 02108Attorney GeneralMartha Coakley:

am writing to express my support for the proposed settlement with PartnersHealth Care relating to its merger with South Shore Hospital. also want to applaudyou for promoting cost containment and ensuring direct care positions will notsuffer as part of this merger.As a lifelong resident of the South Shore, believe it is imperative that we continueto promote world class healthcare options and services in my region. South ShoreHospital already provides superior services that believe will be greatly enhancedby this merger. On a personal note, was quite pleasedby the level of care given to afamily member at the Dana Farber Cancer Institute. This merger will help to sustainthe SSH s services onward into the future.As a state legislator, am also acutely aware of the lack of services in our area forpeople with mental health challenges. was very happy to learn that this merger willbring another affiliation with McLean Hospital, a world leader in psychiatricservices, to our region. have no doubt Partners Health Care can help improveservices in various ways through the merger with SSH.Quality is also an important concern for my constituents, especially the elderly whoare particularly wary of unpredictable and costly medical expenses. The settlementnegotiated with Partners Health Care limits cost increases at South Shore Hospitalover the next few years. elieve it is a balanced approach that serves our strongdesires for both affordable and high quality health care.

elieve the state s review of this merger through the Health Policy Commission andnow your office has been thorough and transparent. For the benefit of me and my


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family, my constituents and all residents of the South Shore, it is time to concludethis review process and allow the merger to move forward. Thank you again foryour efforts.Sincerely,

James


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THE KRAFT GROUPOne Patriot Place Foxborough, MA 02035-1388Telephone: 508-543-7940 Fict: 508-543-7942

R obekt K. K raftChaiviium CEO

July 15 2014ttorney General Martha Coakley

Office of Attorney GeneralAntitrust DivisionOne Ashburton Place, IS 1FloorBoston, MA 02108Dear Attorney General Coakley,I am writing to underscore the importance of Partners HealthCare to the health of the individuals, families andcommunities in Massachusetts, as well as the significant impact Partners AMCs and their intellectual property have onour Commonwealth s economy.My family and I have a long history with Partners HealthCare, one built on the shared vision of broadening access toquality cost-effective health care across the state. It is for this reason that we chose to collaborate with Partners increating The Kraft Center for Community HealthThrough The Kraft Center for Community Health, we work with the brightest young doctors in Partners system todevelop close relationships with community health centers to support low-income, higher-riskpatients providing themwith the highest quality care available. In addition, weshare a broader national vision for innovative training andleadership models to continually strive to improve community health care. The exceptional talent that exists at PartnersAMCs will provide the best opportunity for national expansion.Fortunately, with my family s long history and close relationship with Partners HealthCare, I have gained tremendousrespect and appreciation for the leadership of the organization.1am convinced that under the direction of Dr. GaryGottlieb, Partners will not only continue to provide the highest levels of care and research, but will also lead the way inproviding cost-effective care in the community. In addition, I believe that the medical advancements in diagnostics andtreatments that emanate from the AMCshave a material impact on the Commonwealth s economy. They create jobs withgood wages and products that are shipped globally. While there are many other great providers of health care in theCommonwealth, none have the overall impact of the Partners AMCs.My understanding is that the provisions of the agreement negotiated between Partners HealthCare and the AttorneyGeneral create a closely monitored process to contain costs and maintain needed community services for years to come. Ifully endorse these efforts to sustain this commitment and I look forward to many more years of collaboration withPartners HealthCare.

dnoys 3Hi ZP6LCPS309 i:9 fI02/SI/Z 0Z0/Z0 39Vd


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P O L I E DEPARTMENTTOWN OF FOXBOROUGH

Edward T. O LearyChief of Police

Telephone: (508) 543-4343Fax: (508) 543-2112

July 14,2014R E C E I V E

Office of the Attorney GeneralOne Ashburton Place, 18th FloorBoston, MA 02108 OFFICE OF THE ATTORNEY G/MtKMi

EXECUTtVE BUREAU

Attention; Antitrust DivisionJust recently the Brigham and Women s/Mass General Health Care celebrated their fifthyear anniversary here in Foxborough. During this time period, both management and staffhave become great partners in the Town of Foxborough. It was a given that the expandedhealth care options and care offered to residents and other patients would be substantiallyincreased, and it was an unexpected bonus on how hard staff members have worked to bepart of the Foxborough Community.From my own personal knowledge, teams from the Brigham and Women s/Mass General,have worked on projects in our school system as well as with other community groups. Inparticular, the Town s Domestic Violence prevention group H.U.G.S. Foxboro has hadactive support in many of the programs presented in our community. This has been doneby volunteers from the Care Center working on their own time to keep people safe.Their effort continually demonstrates the commitment they have made to the Foxboroughregion, and I am thankful for their efforts in my town.Sincerely,

Chief of PoliceTown of Foxborough

8 CHESTNUT STREET FOXBOROUGH, MA 02035


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PUTNAM INVESTMENTS PUTNAM INVESTMENTS 1 2 : 2 5 : 2 0 p m 0 7 - 1 6 - 2 0 1 4 2 2

Robert L Reynolds 617 760 8800617-760-7154 [email protected] andChief Executive OfficerOne Post Off I gSquareBoston. MA 02109

PutnamI N V E S T M E N T SJuly 16, 2014Attention: Antitrast DivisionOffice of Attorney GeneralOne Ashburton Place, 18th FloorBoston, MA 02108

Dear Attorney General Coakley:As a Massachusetts resident and head of Putnam Investments, I am proud of and grateful for thehigh-quality health care available in our state. We are national leaders in this area, and PartnersHealthCare is a major player in driving the innovations that make this possible.Partners is a leader in providing world-class medical care, as it has been a leader in engagingcommunities to ensure the same level of service is widely available and reaches neighborhoodswhere access to quality care is often a challenge and a concern. Partners HealthCare has neverwavered in this commitment; indeed, as Dr. Gary Gottlieb has shared with me, its mission is to builda health care system that is both accessible and affordable for its patients.I know the team at Partners have devoted resources to this vision, and is poised to makeMassachusetts as much a leader in driving down health care costs as it in delivering world-classmedical services and research. And I know tii t Partners will continue to take a lead role inproviding care for underserved communities, and in areas like mental health services, which sufferfrom a lack of available care and resources.I have a broad understanding of the agreement between Partners and the Attorney General, and Iunderstand that the proposed agreement is designed to ensure that coordinated care remainsavailable in the community, closer to patients homes at lower cost I support this view and urge thecourt to approve the agreement.

All the best.

Robert L. ReynoldsPresident and Chief Executive OfficerRLR:mc


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Suffolk Construction National Headquarters:G5 Ailerton StreetBoston, MA 02119B17-445-3500www .suffQlkcQnstruct iDn.GDm

Attn: Antitrust DivisionOffice of Attorney GeneralOne AshburtonPlace, 18th FloorBoston, MA 02108

s3JDcn

SU OLK

July 16, 2014Dear Attorney General Coakley,

am writingas someone who has seen first-hand the importan t role PartnersHeatlthCare plays n the life of our communities and our economy.Partners HealthCare is akey ally n providing high-quality care for many of ouremployees, and n extending that care into the neighborhoods we know wellthrough our business. Partners has a particularly strong record in nvesting incommunity hospitals and community health centers an ongoingcommitmentthat has been crucial in helping meet the needs of underserved populations.personally know many of the leaders of PartnersHealthCare, and understand

their vision for bringing care to our communities and our neighborhoods tobenefit patients and their families. As the head of one of Boston's largestcompanies, also know that Partners is vital to the city's and region's economy asthe state's largest private employer and symbol of Boston's reputation as a world-class medical center.As ave readnews accounts of the agreementbetween Partners HealthCare andthe Attorney General, it is clear the agreement will require Partners to do what ithas said it will do: containhealth care costs while continuing to provide quality,coordinated medical care and mental health services for patients in theircommunities. It is apparent to me that holding Partners to such a commitment sin the public interest.Based on the news accounts of the agreement between Partners HealthCare andthe Attorney General, believe Partnerswill be able to continue pursuing itsmission as it addresses the concerns expressedby the Commonwealth. Therefore,

support the agreement and would respectfully suggest that the court approve itso thclt Partners canmove forward to assist in helping to meet our communities'needs.

John FishCljO Chairman, Suffolk Construction


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B O S T O N H E L T H C A R E / o rt h H O M E L E S S P R O G R A M

July 15,2014Attorney General Martha CoakleyOffice of Attorney GeneralOne Ashburton Place, 18th FloorBoston, MA 02108Attn: Antitrust DivisionDear Attorney General Coakley,

With exuberance and enthusiasm, we write this letter in support of PartnersHealthCare. Along with Boston City Hospital (now Boston Medical Center),Massachusetts General Hospital (MGH) and Brigham and Women's Hospital (BWH)have been crucial partners in the development and sustenance of the Boston Health Carefor the Homeless Program (BHCHP) since we were founded through a Robert WoodJohnson grant to the City of Boston in 1985. We cannot emphasize enough howinvaluable the quiet and steadfast support of Partners HealthCare has been to our programand to assuring excellence and continuity in the medical, behavioral and oral health careof homeless persons in Boston for almost three decades.

A city-wide coalition of community health centers and hospitals (including BCH,Lemuel Shattuck Hospital, MGH and BWH) collaborated with shelters and social serviceagencies, city and state representatives, and homeless persons and their advocates tocreate BHCHP, now the nation's largest and most comprehensive freestanding healthcare for the homeless program. Teams of physicians (internal medicine, family medicineand psychiatry), nurse practitioners, physician assistants, nurses, social workers and casemanagers provide direct care services for over 12,000 homeless men, women andchildren in clinics located in two hospitals (BMC and MGH) as well as almost 70 adultand family shelters, soup kitchens and other outreach sites throughout metropolitanBoston. A dedicated team conducts regular clinics in the backstretch barns of SuffolkDowns Racetrack where several hundred homeless and migrant workers tend to the needsof thoroughbred racehorses, Our innovative 104-bed medi cal respite program provides24-houi' acute and sub-acute, pre- and post-operative, rehabilitative and recuperative, andpalliative and end-of-life care for homeless men and women who are too ill to withstandthe daily rigors of life in the shelters and on the streets and would otherwise requirecostly acute care admissions.

The litany of Partners Healthcare's contributions to BHCHP is as remarkable aslong. One of us (JOC) was a senior resident in medicine at MGH in 1985 when asked bythat hospital's leadership to serve as the new citywide program's fulltime physician.

Provid ing services as Barbara Mclnnis House and Mclnnis Health Group7 8 0 Albany St reet Boston MA 02118-2524 Tel 857.654.1000 Fax 857.654.1100 www.bhchp.org


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MGH embraced BHCHP in the mainstream of the hospital's mission, hosting a dailyclinic for homeless persons within the Medical Walk In Unit for almost thirty years.MGH and BWH have incorporated BHCHP and the care of homeless persons into theambulatory experience of primary care residents, BHCHP doctors were fullycredentialed by one or both of the hospitals and encouraged to be attending physicians onthe inpatient medical services, facilitating the education of residents and nurses about thespecial needs of homeless persons. Indeed, in the first years of our program, ninemedical residents at MGH and BWH accepted fulltime positions with the program,creating a professional career and promotional track for engaging young physicians in thecare of this vulnerable population.

In the early 1990s, BHCHP was faced with a vexing dilemma. With accessibleclinics in multiple shelters and soup kitchens, coordination of care was challenging withpaper records located within each site. Dr. Octo Bamett and Dr. Henry Cheueh of theMGH Laboratory of Computer Science worked tirelessly with BHCHP's clinicians andcreated a fully functional electronic medical record in 1995, a landmark for homelessprograms that vastly improved the coordination of care for this itinerant population.

Much of the development of our medical respite program is due to the vision,creativity and stalwart support of Dr, H. Richard Nessen, then President of BWH andlater the first President of Partners HealthCare, Together with the MassachusettsHospital Association and the Commonwealth's Department of Medicaid, Dr, Nessenbrokered a creative solution to fund medical respite care in 1992. Massachusetts remainsthe only state to provide Medicaid support for this vital service for homeless persons.

Our original respite program opened in September of 1985 with 25 beds nestedwithin the Shattuck Shelter. The devastation of the AIDS epidemic, compounded by anoutbreak of multi-drug resistant pulmonary tuberculosis, increased not only the demandfor these beds but also the acuity and complexity of care. Sea changes in the health caredelivery system soon followed, with DRGs radically diminishing the lengths of stay formost illnesses, opening a deep chasm in the continuum of care that has caused hospitalsto struggle for safe discharge options for homeless persons. This demand has persisted.In 2006 BHCHP implemented a first-ever capital campaign to renovate the formerMallory Institute of Pathology (and former City of Boston morgue) for an integratedmedical and behavioral health clinic, a dental clinic, a pharmacy, and an expanded 104-bed medical respite program. Once again. Partners HealthCare staunchly responded withan extraordinarily and unprecedented gift of $2,5M, In addition, Partners HealthCare hasdirectly funded a number of respite care beds for the past 10 years. Specialists fromMGH and BWH come regularly to our respite program to see our patients, includingneurology, urology, dermatology and podiatry. Over half of the 2500 yearly admissionsto BMH are referred directly from area hospitals and emergency departments, and thisprogram remains a national model for quality care that improves utilization and reducescosts in the care of this population.


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Rough sleepers avoid shelters and sleep chronically on the streets. This subgroup of the homeless population bears the highest burden of co-occurring medical,mental health and substance use disorders. BHCHP has prospectively followed a cohortof 119 rough sleepers since 2000. Massachusetts' Medicaid data revealed over 18,000emergency room visits for this cohort during a five year period, while the crude mortalityrate over seven years was almost 50% despite an average age of 45 at the time ofenrollment. The leading causes of death are cancer, heart disease and liver disease. Toaddress this glaring health care disparity, MGH and Partners HealthCare have beencritical partners with BHCHP in the development of an integrated and co-locatedmultidisciplinary team dedicated to the care of street folks. Two internists (both trainedat MGH), a nurse practitioner (trained at the MGH Institute of Health Professions), apsychiatrist (fully funded for 7 years by MGH) and a case worker follow a panel ofapproximately 800 chronic street dwellers in a delivery model that emphasizes continuityof care through night rounds on Pine Street Inn's van, daytime walk rounds through thecity, home visits to those who have been placed in low threshold housing, and a uniqueThursday clinic at MGH for rough sleepers that facilitates the management of chronicdiseases and access to specialty care and necessary imaging and other studies. Begun in2002, this is the only hospital clinic in the country dedicated to rough sleepers andcurrently serves from 60-100 individuals each week. MGH provides coffee and pastries,lunch vouchers, and a special waiting room to help ease fears and welcome theseindividuals. Our street team clinicians are all credentialed at MGH and assist in theevaluation, treatment and discharge planning for rough sleepers.

Time and space do not permit a more exhaustive review of the contributions ofPartners HealthCare to BHCHP and the homeless community. To name only two,BHCHP has received a nursing innovation grant from MGH to improve care at ourMclnnis House and the Palliative Care Team at MGH and B WH has worked closely withour staff to improve the quality and comprehensiveness of end-of-life care at BMH.

Thank you so much for this opportunity to highlight the crucial role of PartnersHealthCare in the history and success of BHCHP. We have been blessed to be welcomedinto the mainstream of the academic teaching hospitals and to share in the expertise andpursuit of excellence in the care of poor and vulnerable populations. We look forward toa continued partnership that improves the quality of care, eliminates health disparities andreduces costs in the delivery of health care services to our impoverished neighborswithout homes. We could not do this without the support of Partners HealthCare.

Respectfully,

Barry BockChief Executive Officer

J / ''Connell, M.D.President


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South Shoreospital

55 Fogg RoadSouth WeymouthMassachusetts 02190 2455www.southshorehospital.org

RICHARD D MIREL MD FACPChairman Department of Medicine

July 16,2014

Office of the Massachusetts Attorney GeneralAttn: Antitrust DivisionOne Ashburton Place - 18th FloorBoston, MA 02108Dear Attorney General Coakley:As Chairman of the Department of Medicine, I am writing to express my support for theDetermination of Need application for South Shore Hospital to join the Partners Health CareSystem project 3CI9.I have been Chair of Medicine at South Shore Hospital for 12 years and have seen a dramaticchange in the way in which medical care is delivered to the community. A significant part of thischange is related to our enhanced clinical affiliation with the Brigham & Women's Hospital/Partners Health Care. We have built a significant Cardiovascular Center and a state of the artCancer Center to deliver the type of advanced care that the community both needs and desires.Emergency and elective angioplasty are both available to patients on the South Shore. We wouldnot have been able to deliver this type of care without our clinical affiliation with Brigham &Women's Hospital and the Dana Farber Cancer Institute/Partners Cancer Care (DFCI/PCC). Wehave a significant clinical trials program that also has been enhanced by our clinical relationshipwith both the Brigham & Women's Hospital and the DFCI/PCC.In order to be able to deliver the next level of care, that is, to have fully integrated care for ourpatients and to provide a spectrum of care in a continuous fashion, it is essential that we have acorporate affiliation with Partners Health Care and the Brigham & Women's Hospital. We need toexpand local access to primary and specialty care and have the ability to transfer that information toa tertiary center, the Brigham & Women's Hospital, when needed. All information needs to beseamlessly transferred via an integrated electronic health record (EHR).We have initiated many projects to attempt to bridge the continuity of care for patients and toprovide care from the primary care level through advanced hospital care with transfers to theBrigham & Women's Hospital for tertiary and quaternary care. Our systems at this point are notsufficient for this to be seamless. As Chair of Medicine, I think it is essential that we bring theworld-class experience and resources of New England's largest health care network to South ShoreHospital to better serve our patients on the South Shore.


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If we are serious about the importance of health care providers working together to improvecoordination of care, accessibility and affordability of care, and the new payment models that arecurrently being structured, we must make fundamental changes in our relation to a tertiary caresystem such as Partners Health Care System and the Brigham & Women's Hospital, which hasbeen our clinical partner for well over ten years. We need access to advanced technology andsystems of care that would be integrated with our current platform.The Department of Medicine and its subspecialties provide both frontline care as primary carephysicians, that is, general internists, as well as specialty physicians, that is, oncologists whodeliver cancer care, cardiologists who perform interventional cardiology, endocrinologists whodeliver care related to diabetes and other endocrine systems, as well as numerous other specialties.Each of these areas requires a relationship with more advanced care, technology and educationalopportunities that the Partners Health Care System and Brigham & Women's Hospital can affordus.If South Shore Hospital is to be true to its mission and continue to support the community's healthcare needs, it must join Partners Health Care to be able to deliver the most sophisticated and cost-efficient care possible.I strongly support the proposal for South Shore Hospital to join Partners Health Care andrecommend that the Determination of Need application be approved.I would be happy to supply you with further information or answer any questions that you haverelated to this matter.

RDM/camcc: Mr. Richard Aubut

Chief Executive OfficerSouth Shore Health and Educational CorporationSouth Shore Hospital55 Fogg RoadSouth Weymouth, MA 02190

Sincerely,

Richard D. Mirel, M.D.


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Boston Private Industry CouncilBoston s Workforce Investment oard

Gary L. Gottlieb, M.D., M.B.A. Neil SullivanChair Executive Director

Ju ly 17, 2014Dear A ttorney General Coakley,

write this letter in support of Partners Healthcare and to highlight the vital role i t plays in our l o ca leconomy and community. As executive director of the Boston Private Industry Council PIC) , Boston sworkforce investment board, have had the opportunity to work with Partners Healthcare in its role asa c iv ic and economic leader.Partners i s the number one provider of summer employm ent for urban teenagers, supervising andmentoring over 300 PIC high school students from the Boston Public Schools and hundreds more fromother communities. Partners school-year internship initiatives at the Brigham and Women s andMassachusetts General hospitals are the most advanced programs of their kind in the country, and theyare capped with substantial scholarships for their inner-city graduates. Partners is no less committed toour adult population, providing access to employment for neighborhood residents, social services in ourcommunities, and training and career ladders for entry level employees.

have seen this commitment on a personal level as well, through the work of Dr . Gary Gottlieb, whochairs the Boston PIC Board of Directors. He i s deeply committed to expanding our local workforce andto ensuring that young people have the education and training to take advantage of our thriving healthcare sector. He brings passion and rare intelligence to the pursuit of social and economic justice, and hisleadership is grounded in both conscience and sound analysis.Partners Healthcare provides work not just for doctors and nurses, but solid jobs for people from allbackgrounds and walks of l i fe . It has created programs to employ com munity residents with little workexperience, provided career growth for existing employees and opened educational opportunities tothose who thought they had none. In addition to employing more than 60,000 individuals, making it thestate s largest private employer. Partners i s home to the doctors and researchers who are a majorreason why Boston is seen the world over as a center for medical innovation. Its prominence hasbenefits for the Massachusetts economy far beyond its own employee base.It is my understanding that the agreement between Partners Healthcare and the Attorney General wil lserve to contain health care costs while providing quality, coordinated care in Eastern Massachusetts.As one who works closely with Partners and seen its dedication to providing economic opportunities,am confident it wil l be committed to carrying out its mission to improve care coordination and to reducecosts. Just as importantly, respect the diligence exercised by your office and the Partners team inreaching an agreement . support the agreement and urge the court to approve it.

Sincerely,

Neil Sullivan

2 Oliver Street Boston, Massachusetts 02109 617-423-3755 Fax 617-423-1041555 AmoryStreet Jamaica Plain Massachusetts 02130 617-524-5224 Fax 617-524-1046 compactwwiu.bostonpic.org


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oston University School of Public HealthDepartment of Health Policy and ManagementMedical Campus715 Albany Street, T3-WestBoston,Massachusetts 02118-2526T 617-638-5042 F 6i7-S38-5374

BOSTONUNIVERSITY

17 July 2014Attorney-Genera Martha CoakleyCommonwealth of Massachusetts18th floorOne Ashburton PlaceBoston, MA 02108Attention: Anti Trust Division

Dear Attorney-General Coakley:I'm concerned that the agreement you have recently negotiated with Partnersconcerning its combination with South Shore Hospital and other caregivers is not in thepublic interest. I'm writing this letter because Judge Sanders has ordered thatcomments on this agreement be submitted to you. Of course, write individually andnot on behalf of Boston University or any of its components.First, since 1993, Partners has claimed that its various mergers and affiliations (which,for convenience, I'll call "combinations") sought to save money, and that they wouldsave money or have saved money. But Partners has adduced no credible evidence tosupport those claims. Therefore, no one should believe Partners' assertions that stillmore combinations will save money.Second, Partners has claimed that its combinations would improve quality of care. ButIt has provided neither credible evidence of past improvements in quality attributable toits combinations nor plausible arguments that its combinations are essential to futureimprovements in quality. See, for example, Thomas Tsai and Ashish Jha, "HospitalConsolidation, Competition, and Quality: Is Bigger Necessarily Better?" JAMA, Vol.312, No. 1 (2 July 2014), pp. 29-30, http://iama.iamanetwQrk.cQm/artic[e.asDX?articleid-1884584. Seealso Molly Gamble, "Integrated Chaos: Health Systems and the Aftermath of DefensivePhysician Acquisitions," Becker s Hospital Review., 9 June 2014,httP.V/www.beckershQSPitali'eview.com/hQSDital-Dhvslcian'reratiQnships/intearated-chaos-health-svstBms-and-the-aftermath-Qf-defensive-phvsician-acauisitiQns.html.

Third, Partners has generally argued that its various combinations would be good forthe public. contest this assertion and have long argued, with colleagues, that thesecombinations were designed mainly to benefit Partners by boosting the prices it is paidfor care and thereby increasing its revenues, and thereby liberating it to spend and growwithout fear of price competition. See Alan Sager, Deborah Socolar, and Peter Hiam,"Public Not Served by Merger of MGH, Brigham," Boston Business Journal, 14 January1994, p 13.
http://iama.iamanetwqrk.cqm/artic%5be.asDX?articleid-1884584http://iama.iamanetwqrk.cqm/artic%5be.asDX?articleid-1884584http://iama.iamanetwqrk.cqm/artic%5be.asDX?articleid-1884584http://iama.iamanetwqrk.cqm/artic%5be.asDX?articleid-1884584http://iama.iamanetwqrk.cqm/artic%5be.asDX?articleid-1884584


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Attorney-General Martha Coakley 17 July 2014 2

Fourth, over the past two decades, your predecessors, various Massachusettsgovernors, various commissioners of public health, and other high elected officials havechosen to believeor said they believedPartners' claims, assertions, and promises.Fifth, the original Partners combination, with successive accretions, help to explain whythe cost of Massachusetts hospital care specifically and Massachusetts health caregenerally has continued to rise, By reducing competition, Partners' combinations havehelped to deepen the financial anarchy that allows health costs to rise. When anarchyprevails, the strong hospitals profit, and insurance premiums rise.Financial anarchy results from the absence of anything close to a genuine competitivefree market, or competent government regulation, or exercise of responsible fiduciaryduty. It is no coincidence that the U.S. has both the world's most anarchic health carefinancing and the world's costliest hospital care and health care, and thatMassachusetts has the nation's costliest health care generallyand the world'scostliest hospital care specifically. Further, it is no accident that the Massachusettsexcess over the U.S. average per-person health cost has continued to widen.Sixth, you have negotiated and publicly trumpeted a set of apparent constraints onPartners' behavior, But you offer no convincing evidence that these constraints onbehavior are likely to be practical, effective, or even enforceable. Have they been triedelsewhere? Did they work? How often? Without this evidence, it is likely that theconstraints you have negotiated will actually enable Partners to garner substantialrevenue increases, Right now, the constraints look like feeble regulatory Lilliputians,unable to restrain Partners' Gulliver.Instead of providing evidence that the negotiated constraints on Partners' behavior arelikely to work, you have focused on the procedural superiority of negotiating settlementsover going to trial. You thereby trumpet form over substancenegotiating a deal withPartners instead of providing evidence that those constraints are likely to beenforceable and effective in restraining growth either in the prices paid to Partners'hospitals and doctors, or in the total revenue they garner. Please refer to yourMemorandum of the Commonwealth of Massachusetts in Support of the Entry of FinalJudgment, Commonwealth of Massachusetts v. Partners Healthcare System, Inc.,South Short Health and Educational Corp., and Hallmark Health Corp., Suffolk SuperiorCourt Civil Action No, 14-2033 B.L.S., filed 24 June 2014, p, 4.Others do identify evidence that these constraints are not likely to work. See, forexample, authorities cited in letter from Richard M. Brunell, General Counsel, AmericanAntitrust Institute, to Hon. Christine Roach, Justice of the Superior Court, SuffolkSuperior Court, 26 June 2014, concerning Commonwealth of Massachusetts v. PartnersHealthcare System, Inc., South Short Health and Educational Corp., and Hallmark


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Health Corp., Suffolk Superior Court Civil Action No. 14-2033 B.L.S., filed 24 June2014. Please refer specifically to the third footnote.In some respects, the constraints you have negotiated crudely parallel those of thestate's putative effort to restrain health care costs, c. 224 of the Acts of 2012. But this isnothing to write home about. don't know a single person who imagines that c. 224,sapproach will be effective. It might identify hospitals whose revenues grow faster thanspending targets, but those hospitals will claim that various volume or case mix ortechnological changes justify that faster growth. Ceaseless finger-pointing will result.No one will be held accountableespecially if political pressure for health care costcontrol remains, like Nebraska's Platte River, a mile wide and an inch deep.Seventh, despite the absence of evidence to support Partners' claims that itsconsolidations save money and improve quality, and despite the absence of evidence tosupport the enforceability and efficacy of your negotiated remedy that allows substantialnew consolidations, you assert that your negotiated settlement will be financially andclinically beneficial to the people who need or pay for health care in the Commonwealth,Sadly, this assertion is not credible.Eighth, therefore, we should look closely at alternatives. Four other paths forward arepossible.Path A is to introduce comprehensive state regulation of health care spending, includinghospital budgetsas is being done in Maryland. See Rahul Rajkumar and others,"Maryland's All-payer Approach to Delivery-system Reform," NEJM, Vol. 370, No. 6 (6Feb, 2014), pp. 493-5, o 56/ nejmpi3146S6Path B is to allow Partners to continue to growand even to encourage faster growth.The logical extension of this approach is to establish Partners as the sole provider andorganizer of health care in the Commonwealth, It would receive all revenue and beaccountable for delivering all effective and affordable services to all citizens. It wouldhave to adhere to standards of universality, efficiency, and protection of the publicinterest in affordable, appropriate, high-quality care for all. It would have to delivermedical security to all residentsprovision of needed care in a competent, kindly, andtimely manner, within a budget, and without bankrupting recipients. This approachwould oblige the New Partners to adopt a fiduciary and professional view of its role indelivering affordable and effective health care for all.Path C is to wholeheartedly boost competition among hospitals and among doctors inhopes of lowering the prices paid for health care. Free market competition requirescompetitors, the more the better. Since Partners has produced no evidence that itscombinations have bestowed benefits on the publicnot lower prices and not betterquality and since market advocates believe that more competition is better. Partners


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should be completely split Into the individual, independent hospitals and physiciangroups that existed before 1 November 1993. So should all other multi-hospitalsystems or large groups of physicians. Strong advocates of free market competition inhealth care should support this position,Path D is to sue Partners to break it up into two competing systems, one dominated bythe General and the other by the Brigham. This will boost competition substantially.Payers will be able to play the two new systems off against one another. Substantiallylower prices are likely to result,These four approaches have various strengths and weaknesses. think that path A Ismarkedly superior to the agreement you have negotiated. But political support for thisapproach is unlikely to materialize until years have passed and until Massachusettshealth care descends deeper into financial anarchy. Besides, it is outside your control.Path B is intriguing. With court approval, the agreement you have negotiated withPartners will take our state's hospitals and doctors several big steps farther down thispath. But it is unlikely that we all will reach the path's end any time soon. Impedingfurther progress are the fractious realities of Massachusetts hospital care and the beliefthat health care competition is a good idea.Path C, demolishing Partners and all other hospital and doctor combinations in the pasttwo decades is probably somewhat better than the agreement you have negotiated. Itwould take years or decades to accomplish. It would be expensive and acrimonious.And it would greatly heighten uncertainty facing Massachusetts health care at a timewhen other changes in health care access, payment methods, and organization of carealready threaten to overwhelm management's capacity to cope.Besides, health care does not come close to satisfying any of the six requirements for afunctioning competitive free market, I don't think it can.Current efforts to make available "transparent" prices and quality measures are notlikely to provide clear information that most patients actually can or will use. Besides,knowing price and quality is not remotely sufficient: the most important question iswhether recommended care is actually needed. We generally rely on doctors for thatinformation. Advocating transparency, therefore, is largely a distraction. It tries to shoehorn health care realities to fit some of the theoretical requirements of a market. Worse,the push for transparency helps to legitimate ever-higher out-of-pocket costs, which inreality constitute a regressive tax on sick people especially those with illnesses thatare costly to treat.Path D is perhaps the most promising right now. It would constitute a relatively narrowintervention, one that is much less disruptive than any of the others. Its meanings


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Attorney General Martha Coakley 17 July 2014 5

would be clear to the public. Although it would not generate anything close to acompetitive free market, it would still boost price competition by slicing Partners' marketpower. Payers could play the General network against the Brigham network. Mostinsurers would want to offer members one network or the other, but few would need orwant to include both, Prices would probably fall substantially from the high levels nowactually paid to Partners' hospitals and doctors by insurers.

Attorney-General Coakley, don't doubt for a second that you mean well. believe thatyou hope to get the best deal from Partners that you can, given its great politicalinfluence. But think the time has come to recognize that your negotiated agreement isnot in the public interest, and to instead confront Partners in court by suing to divide itinto two halves.The resulting dramatic fight in court will offer an opportunity to educate the public aboutthe high cost of financing business as usual in Massachusetts health care. And youmight win Partners might even settle. Especially if you write a strong Brandeis brief.The complaint for injunctive relief that you recently filed (Commonwealth ofMassachusetts v. Partners Healthcare System, Inc., South Short Health andEducational Corp., and Hallmark Health Corp., Suffolk Superior Court Civil Action No.14-2033 B.L.S,, filed 24 June 2014) outlines many of the types of arguments andevidence that you could include in such a brief, They would support a strong legal andeducational campaign to divide Partners into two competing entities. .

hope these thoughts are useful to you.

Cordially

Alan Sager, Ph D.Professor of Health Policy and ManagementDirector, Health Reform Program


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ynnC O M M U N I T Yhe lth i i\ iJuly 14, 2014

Attorney General Martha CoakleyAttorney General s OfficeOne Ashburton PlaceBoston, MA 02108-1518

Re; Settlement with Partners HealthcareDear Attorney General Coakley:We are writing to provide an additional perspective on the settlement that has been reached by youroffice with Partners Healthcare System, which we understand to be a highly complex public policyissue.

The Lynn Community Health Center Board of Directors has been very involved in the local discussionabout the proposal by the North Shore Medical Center to reconfigure the Union and Salem Hospitalsin providing care for the communities it serves. The Lynn Community Health Center shares a largepatient population with North Shore Medical Center and we have worked together for many years todevelop effective clinical and administrative collaborations for the benefit of the patients we share.Many of our joint clinical programs serve as models for hospital/community health centercollaborations. Over the years, Partners Healthcare and North Shore Medical Center have providedkey resources to the health center that have allowed us to develop an Urgent Care program, to initiateprimary care services in the Market Square area in Lynn, to build a new addition to our main facility onUnion Street in downtown Lynn, to expand primary care and behavioral health services at UnionStreet, and to develop creative new approaches to care management for patients with complexchronic illnesses.

We believe that the plans for the Union and Salem Hospitals reflect Partners continuing commitmentto collaboration with the Lynn Community Health.Center and to the progress we have made towardassuring that all residents of Lynn have access to the full range of needed care.While it is very difficult to see hospital medical services leave Lynn, we believe that the significantinvestments proposed by Partners in community-based primary care, behavioral health and substanceabuse services, specialty care and transportation will be positive steps toward meeting many of theunmet health needs of Lynn residents, and helping to reduce unnecessary, preventable and expensivehospital based services.

The health center looks forward to continued discussion with Partners and North Shore MedicalCenter about the further development of targeted community based services that could improve thehealth of all of the people who live in the City of Lynn.While we recognize that the proposed re-configuration of hospital medical and psychiatric services forLynn residents is not at the core of the complicated settlement agreement that is at issue, it is ourunderstanding that the agreement will permit these efforts to proceed, providing coordinated patientcare and increased mental health services in our community. We support that result. Finally, we

1 1 lUfl HE LT9


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think it is important to note the long term commitment Partners Healthcare has made and continuesto make in one of the most medically underserved and needy communities in the Commonwealth.Sincerely,

-Lorr^brams BerryExecutive DirectorLynn Community Health/Center

>The Reverend Jaire^GouldRector, St.Stephen s Mmiorial Episcopal ChurchPresident, Board of-E>irectorsLynn Community Health Center


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M NION G YNOR M NNING

617 670 8800 main617 670 8801 oxwww.mgmlaw.com

21 Custom House StreetBoston, MA 02110

Thomas F ReillyOf Counsel

Direct Dial: 617 670 8509Direct Fax: 617 670 8709

E-mail: [email protected] In: MA

July 17, 2014The Honorable Janet SandersAssociate JusticeThe Superior Court, Business Taw SectionSuffolk County Courthouse, IS''1 FloorThree Pemberton SquareBoston, MA 02108

RE: Commonwealth of Massachusetts v. Partners Healthcare System, Inc., et al,Superior Court, C.A. No.: 14-2033-BTSDear Judge Sanders:

My name is Tom Reilly. I am Of Counsel to the Boston law firm of Manion GaynorManning TTP and a former Attorney General for Massachusetts (1999-2007). I offer mycomments for your consideration regarding the proposed Consent Judgment in the above-titledmatter.

Throughout my tenure as Attorney General, I and my staff devoted significant time andresources to major challenges in our health care system. These challenges included, amongothers, the Harvard Pilgrim receivership in 2000, the monitoring of a large number of fin nci llystruggling hospitals throughout Massachusetts and allegations of unfair practices and anticompetitive behavior in greater Springfield and eastern Massachusetts.

In eastern Massachusetts, the allegations of anti-competitive behavior were centered on thePartners Health Care System. To deal with these and other issues regarding health care, I met ona regular basis with critics of Partners, including competitors, insurers, academics and otherknowledgeable parties.

I took the Partners critics' concerns seriously, although many of the remedies proposedinvolved policy changes more properly within the purview of the legislature. It was also clear tome and my staff that while Partners was obviously large and dominant, we faced seriouschallenges to a successful prosecution under the anti-trust laws in place at that time. For themost part, the state of the law remains the same and, in my opinion, the Attorney General wouldcontinue to face significant challenges in an anti-trust case against Partners.

Given these obstacles, what the Attorney General has achieved in the proposed judgment isquite impressive and I commend her and her staff for the action they have taken. While theconsent agreement allows the proposed acquisitions to take place, the terms of the proposedagreement, in my opinion, impose significant restrictions on Partners which are clear,meaningful and enforceable. For example, the agreement includes restrictions on how Partners

Boston Los Angeles Providence San Francisco Wilmington


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M MMANION GAYNOR MANNING

The Honorable Janet SandersPage 2can negotiate contracts with health insurers and restrictions on growth of not only its hospitalnetwork, but its physician network as well. It also provides a cap on Partners' future rateincreases. The use of these kinds of restrictions can be an effective tool in dealing withcompetitive concerns raised by mergers in a dynamic health market.

In conclusion, I believe the Attorney General, in submitting the proposed ConsentJudgment, is acting appropriately and in the public interest. I respectfully request this Court toapprove it.

In the interest of full disclosure, I have represented Partners on a limited basis in the paston matters completely unrelated to the subject matter of this action. Those matters have longsince been concluded and I do not expect to represent Partners in the future.

Sincerely,

TFR/aaa1295803

cc: Christopher Barry-Smith, First Assistant Attorney GeneralBrent Henry, General Counsel, Partners Healthcare System


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of cost growth and developments affecting both short and long-term health care spending,

quality, and access to care. These reports describe significant trends in the payer and provider

markets, including the use of higher priced providers (provider mix), delivery systemconsolidation, hospital operating expenses, wasteful spending, and treatment of behavioral health

conditions.

Second, because health care costs may be influenced by changes in the delivery system,Chapter 224 directs the HPC to track the frequency, type, and nature of changes in our health

care market. This is done by analyzing notices of material change that are submitted to the

Commission by provider organizations.3 The HPC may also engage in a more comprehensive

review of particular transactions anticipated to have a significant impact on health care costs or

market functioning. The result of such cost and market impact reviews (CMIRs) is a public

report detailing the HPCs findings. In order to allow for public assessment of the findings, the

transactions may not be finalized until the HPC issues its Final Report. Where appropriate, suchreports may identify areas for further review or monitoring, or be referred to the Attorney

General or other state agencies in support of their work on behalf of health care consumers.4

The HPC has produced two CMIR reports regarding three transactions encompassed by

the consent judgment in this matter:

1) Review of PartnersHealthCare Systems Proposed Acquisitions of South Shore Hospitaland Harbor Medical Associates: Final Report(Feb. 19, 2014); and

2) Review of Partners HealthCare Systems Proposed Acquisition of Hallmark HealthCorporation: Preliminary Report (July 2, 2014).

5

Consistent with the HPCs role to provide objective, data driven analyses of factors and

transactions that affect the Commonwealths ability to meet its cost growth benchmark, the HPC

seeks to provide important factual context for the court and parties ongoing consideration of theparties agreement. For example, the proposed consent judgment requires the parties to confer

on mitigating any material price impacts identified by the HPC in its review of the proposed

Hallmark acquisition. Accordingly, the attached comment includes findings from our reportsthat bear on the need for mitigation of transaction-specific impacts. We submit the above-

referenced cost trends and CMIR reports for review along with the attached synthesis of key

findings, organized as follows: (1) a brief overview of HPC findings relevant to this civil action;

3SeeMASS.GEN.LAWSch. 6D, 13 (requiring health care providers to notify the HPC before making material

changes to their operations or governance). See alsoMASS. HEALTH POLICY COMMN,BULLETIN 2013-01:INTERIM

GUIDANCE FOR PROVIDERS AND PROVIDER ORGANIZATIONS RELATIVE TONOTICE OF MATERIAL CHANGE(Mar. 12,2013), available athttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-

material-change-and-notice-form.pdf.4For example, MASS.GEN.LAWSch. 6D, 13(f) requires referral of the CMIR report to the state Attorney Generals

Office if the HPC finds that a provider under review (1) has a dominant market share in its service area, (2) charges

prices that are materially higher than the median prices in its service area for the same services, and (3) has a health

status adjusted total medical expense that is materially higher than the median in its service area.5The parties to this review may submit a written response by August 1, 2014 (within 30 days of issuance of the

Preliminary Report), after which the HPC will issue a Final Report. MASS.GEN.LAWSch. 6D, 13(f).
http://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdfhttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdfhttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdfhttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdfhttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdfhttp://www.mass.gov/anf/docs/hpc/material-change-notices/20130312-interim-guidance-on-material-change-and-notice-form.pdf


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1

Public Comment by the Massachusetts Health Policy Commission

In Re Commonwealth of Massachusetts v. Partners Healthcare System, Inc., South Shore

Health and Educational Corporation, and Hallmark Health Corporation,

Superior Court Civil Action No. 14-2033-BLS

The Massachusetts Health Policy Commission (HPC) hereby submits the followingcomment as authorized by the Suffolk Superior Court concerning Civil Action No. 14-2033-BLS,In Re Commonwealth of Massachusetts v. Partners Healthcare System, Inc., South ShoreHealth and Educational Corporation, and Hallmark Health Corporation. This comment isgrounded in four reports completed by the HPC in the past year containing data driven analysesof the Massachusetts health care market and proposed health care transactions encompassed inthis civil action:

1. MASS.HEALTH POLICY COMMN,2013COST TRENDS REPORT PURSUANT TO G.L.C.6D 8(G): ANNUAL REPORT(Jan. 8, 2014) [hereinafter 2013 CT Report];

2.

MASS.HEALTH POLICY COMMN,2013COST TRENDS REPORT PURSUANT TO G.L.C.6D 8(G): JULY 2014SUPPLEMENT(July 2, 2014) [hereinafter 2014 CT Supplement];

3. MASS.HEALTH POLICY COMMN,REVIEW OF PARTNERS HEALTHCARE SYSTEMSPROPOSED ACQUISITIONS OF SOUTH SHORE HOSPITAL AND HARBOR MEDICAL ASSOCIATESPURSUANT TO M.G.L.C.6D,13: FINAL REPORT (Feb. 19, 2014) [hereinafterPHS-SSH-Harbor Final Report]; and

4. MASS.HEALTH POLICY COMMN,REVIEW OF PARTNERS HEALTHCARE SYSTEMSPROPOSED ACQUISITION OF HALLMARK HEALTH CORPORATION PURSUANT TO M.G.L.C.6D,13: PRELIMINARY REPORT(July 2, 2014) [hereinafterPHS-HHC PreliminaryReport].1

Consistent with the HPCs role to provide objective analyses of factors and transactionsthat affect the Commonwealths ability to meet its health care cost growth benchmark, the HPCseeks to provide important factual context for the court and theparties ongoing consideration ofthe parties agreement. For example, the proposed consent judgment requires the parties toconfer on mitigating any material price impacts identified by the HPC in its review of theproposed Hallmark acquisition. Accordingly, this comment includes findings from our reportsthat bear on the need for mitigation of transaction-specific impacts. This comment is organizedinto three parts: (1) a brief overview of HPC findings relevant to this civil action, (2) a detailedoutline of key findings from each report, including citations, and (3) copies of the four reports.This matter is of public interest, and we hope you find this comment useful in this process andyour review.

1The parties to this review may submit a written response by August 1, 2014 (within 30 days of issuance of thePreliminary Report), after which the HPC will issue a Final Report. MASS.GEN.LAWSch. 6D, 13(f).


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I. OVERVIEW OF KEY RELEVANT FINDINGSA. Spending and Delivery System Trends

Massachusetts is a national leader in innovative, quality health care, but high and rising

costs pose an increasing burden for households, businesses, and the economy. Per capita healthcare spending in Massachusetts is the highest of any state, with Massachusetts devoting 16.6% ofits economy to personal health care expenditures in 2012, compared with 15.1% for the nation.There are large opportunities to reduce costs as an estimated 21% to 39% of total health carespending in the state is wasteful and could be reduced over time without decreasing the quality ofcare people receive.

Over the past decade, growth in spending has been driven primarily by faster growth incommercial prices paid to providers for health care servicesboth growth in unit prices (theprice paid per service or set of services), and a shift toward use of higher-priced providers(provider mix or site of care effects). Care has grown increasingly concentrated in several

large, organized health care systems, with a greater proportion of discharges occurring in higher-priced major teaching hospital systems. In 2009, the top five systems accounted for 48% ofcommercial patient discharges, while in 2014, we estimate the top five systems will account for56% of commercial discharges (estimated to increase to 61% if Partners HealthCare System(Partners) completes its proposed acquisitions of South Shore Hospital (SSH) and HallmarkHealth System (Hallmark), with Partners share of discharges greater than the nextfour systemscombined). Many patients leave their home towns and cities and travel to receive inpatient carein Metro Boston: 81% of these patients go to major teaching hospitals and 47% of them go toPartnershospitals.

Many providers are seeking to promote more patient-centered, accountable care through avariety of organizational models, and payers are increasingly implementing alternative paymentarrangements in efforts to incentivize and support these care delivery reforms. Thesedevelopments, including increasing provider alignments and consolidations, impact health caresystem performance and levels of medical spending. Shifting physician contracting affiliations,increases in market concentration, and changing sites of care and referral patterns (provider mix)can all increase the prices we pay for health care services. While provider alignments mayimprove an organizations ability to promote more efficient, coordinated care, thereby reducingwasteful utilization, evidence to date indicates these efficiencies have generally not outweighedthe spending increases described above.

B. Impact of the Proposed TransactionsThe HPCs reviews of Partnersproposed acquisitions of SSH, Harbor Medical

Associates, and Hallmark found impacts across all of the above factors, with increases inspending anticipated to exceed potential savings from decreased utilization through care deliveryreforms and population health management. From our review of the data and evidence, wefound:


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For the three major commercial payers, the combined transactions are anticipated toincrease total medical spending by more than $38.5 million to $49 million per year2as aresult of unit priceincreases and shifts in care to higher-priced Partners facilities(provider mix).

The resulting consolidated system is anticipated to have increased ability and incentivesto leverage higher prices and other favorable contract terms in negotiations with payers(bargaining leverage), the costs of which are not included in the above projection.

The parties to these transactions have not provided adequate evidence of how corporateownership is instrumental to achieving the desired care delivery reforms, and their ownexperience and that of other providers offer compelling alternative approaches toeffectively improving coordinated care delivery.3

The consent judgment before the Court would allow Partners to acquire SSH, Hallmark,and their related physicians, but includes provisions to constrain Partners contracting practices,network growth, and prices for the next five to ten years. This agreement is designed to alterPartners negotiating power and constrain costs and growth across its entire network, including

mitigating some of the total medical spending increases anticipated from the proposedtransactions. The constraint on average unit price growth across all Partners providers, and theindividual application of that price constraint to South Shore providers, are examples ofprovisions that should mitigate some of the cost impacts of the proposed transactions. While theHPC did not conduct a separate analysis of the proposed consent judgment, we present belowfindings from our analytic reports relevant to this civil action for the consideration of the court,the parties, and the public.

Unit Price

In light of theproposed settlements constraints on unit price growth, price increases

from these transactions will not necessarily result in a net increase in Partners average pricegrowth for the life of the settlement. However, Partners appears to retain certain flexibility toallocate price increases across providers to maximize revenue and market position. For example,without an individual price cap, Hallmark providers may experience unit price growth faster thanthe rate of general inflation. Such price increases would set a permanently increased baselineupon which future price increases would be negotiated and permanently increase baseline totalmedical spending, and premiums, in an area of the state that has thus far not experienced themarket impact of a local, high-priced Partners facility, including by impacting providers whorefer their patients to Hallmark. Moreover, without lasting change to the market structures and

2Since our cost impact analyses are based on data from the three major commercial payers, who represent about80% of the commercial market, they tend to underestimate the total dollar impact to commercial spending. Due tothe nature of contract negotiations and bargaining leverage, we expect that these impacts could be proportionatelygreater for the other 20% of the market, which is comprised of smaller payers with less clout.PHS-SSH-HarborFinal Reportat 30 n. 94;PHS-HHC Preliminary Reportat 6, 49, 49 n. 179.3For brevity, additional findings of the HPCs reviews particularly the anticipated impact of the proposedacquisitions on health care accessare not summarized fully here, but are available atPHS-SSH-Harbor FinalReportat 57 andPHS-HHC Preliminary Reportat 66-72.


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incentives that underlie the operation of bargaining leverage, price caps on their own may not beeffective in keeping costs down.4

Provider Mix

The material price impact of shifts in patient care to higher-priced Partners providers isnot fully encompassed by the current agreement.5 Specifically, increased spending due to shiftsin patient flow to higher-priced providers is not included in the agreements unit price constraint,but rather would be measured as increases in total medical expenses (TME). Since theagreement only monitors the TME for Partners commercial risk business, anticipated increasesin TME as Partners grows its non-risk books of business, currently including Preferred ProviderOrganization (PPO) and non-risk Health Maintenance Organization (HMO)/Point of Service(POS) patients,6are not monitored. The latest publicly filed data by Partners (for 2012) indicatesthat the commercial risk business monitored by the TME provision of the agreement is about11% of Partners total commercial business.7 The agreement also does not monitor the TME ofpatients associated with other provider systems who receive some of their care from Partners,

SSH, and Hallmark facilities and specialists.

Bargaining Leverage

We understand that the proposed consent judgment aims to mitigate Partners bargainingleverage by allowing payers to negotiate for all or only certain components of the Partnersnetwork. While we recognize the potential for this change in current contracting practices topromote a more competitive market, we note that the impact of this change will depend, amongother considerations, on whether and to what extent payers vigorously pursue this option and onhow the market responds.8

4In other circumstances where mergingproviders have been subject to a price cap, prices have risen after the capsexpiration. PHS-HHC Preliminary Reportat 42 n. 152.5These transactions are anticipated to result in net shifts in patient volume from other providers to the Partnerssystem. SeePHS-SSH-Harbor Final Reportat 35 and Exh. B-1 at 11;PHS-HHC Preliminary Reportat 45, 53-54,and 56. This shift in volume and revenue to the Partners system is not only anticipated to increase spending, butmay also affect the financial viability of lower-priced provider options. See PHS-HHC Preliminary Reportat 15, n.61 (describing how providers often rely on a balanced mixof services and payers to maintain financial viability andadequate access to all services and cautioning that if the proposed transaction drive[s] changes in the service mix

or payer mix of the parties or other area providers, these changes could have significant implications for how ourhealth care system finances adequate access to all needed services, including low-margin services, for allpopulations). See also PHS-HHC Preliminary Reportat 14-15, n. 58; 2013CT Reportat 34.6Patients in PPO products, which do not require patients to designate a primary care provider (PCP) or obtainreferrals to other providers through that PCP, are currently excluded from commercial risk contracts. The extent to

which HMO/POS patients are covered by risk contracts differs by payer and provider; for example, for some majorpayers, self-insured HMO/POS patients are currently not included in risk contracts.7SeeMASS.HEALTH POLICY COMMN, Annual Cost Trends Hearing (2013), Pre-Filed Written Testimony ofPartners HealthCare System, Response to Exh. C, Q.5, available athttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsx.8For example, relevant considerations may include whether purchasers and consumers find more limited networksthat include only components of provider systems appealing; how component contracting will operate in the contextof a shift to global payment arrangements, which generally seek to reimburse providers for coordinating care acrosstheir entire networks; and, in light of the time delimited nature of the settlement, to what extent component
http://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsxhttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsxhttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsxhttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsxhttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsxhttp://www.mass.gov/anf/docs/hpc/attachment-b-for-phs.xlsx


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Monitoring of Settlement Terms

Finally, in light of the HPCs extensive work monitoring the metrics of health care costgrowth, we note that the full impact of the proposed settlement will depend on effectivemeasurement and monitoring of key terms underlying the agreement, such as prices and TME.

There appear to be some aspects of the current definition of those terms that could allow forprice and TME increases in excess of general inflation and the health care cost growthbenchmark, respectively, and other aspects that are not yet determined and may be refinedthrough the monitoring process.9

C. ConclusionMassachusetts law establishes a statewide benchmark for a sustainable rate of growth of

total health care expenditures, set at 3.6% for 2014. This target is not a short-term goal, but onethat is envisioned to be maintained as outlined in the law for the next decade and beyond. Whilerecent spending growth in Massachusetts has slowed in line with slower national growth,

sustaining lower growth rates over the long term will require a concerted effort to advance amore competitive, value-based health care market and efficient health care delivery system.

This comment reflects the HPCs view that all factors that impact total medical spendinggrowth should be closely monitored and moderated in order to achieve the benchmark.Consistent with the HPCs role to provide data driven analyses of factors and transactions that

affect the Commonwealths ability to meet its benchmark, this comment includes findings fromour reports of market and TME impacts from the proposed transactions that are not addressed bythe current agreement, such as shifts in patient care to higher-priced providersand the impact ofunit price increases over time. Increased spending as Partners providers grow their non-riskbooks of business is not monitored by the current agreement. Growth in unit prices from thesetransactions will set a permanently increased baseline upon which future price increases will benegotiated and will permanently increase baseline total medical spending in areas of the state thathave thus far not experienced the market impact of a local Partners facility. Moreover, withoutlasting change to the market structures and incentives that underlie the operation of bargainingleverage, price caps on their own may not be effective in keeping costs down.

Finally, we note that Partners, Hallmark, and SSH have consistently advocated for thesetransactions on the basis that they will lower total medical spending, and have publicly statedtheir purpose in consolidating is not to raise prices. As such, increases in total medical spendingand growth in unit prices would be inconsistent with those claims.

We hope you find these materials useful in this process and your review.

contracting can effect lasting changes to the market structures and incentives that underlie the operation ofbargaining leverage. Cf. supranote 4.9For example, we understand that the price growth restriction will be monitored based on Partners revenue fromthe previous year, including the previous years mix of patient membership and services. It would be helpful toobtain more detail on this provision, as it may be possible for price growth in excess of general inflation to berealized based on a shift in Partners mix of patient membership or services from one year to the next.


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II. DETAILED OUTLINE OF FINDINGSBelow is a more detailed outline of key findings from each report, including relevant

citations. It is organized into four subparts: (a) spending levels and trends in the Massachusettshealth care market, (b) Massachusetts delivery system trends, (c) profile of Partners, SSH, and

Hallmark, and (d) impacts of the proposed transactions.

A. Spending Levels and Trends Per capita health care spending in Massachusetts is the highest of any state in the

United States, with higher spending than the national average across commercialinsurers and public payers. Massachusetts devoted 16.6% of its economy to personalhealth care expenditures in 2012, compared with 15.1% for the nation. 2013 CTReportat 8-12.

Massachusetts has better overall health care quality performance and offers betteraccess to care than many other states, but there are large opportunities to reduce costs

without harming the quality of care, as an estimated 21% to 39% of total health carespending in Massachusetts could be considered wasteful (representing $14.7 to $26.9billion in 2012). 2013 CT Reportat 36.

Higher spending levels in Massachusetts reflect both higher prices and higherutilization of services.o Over the past decade, Massachusetts health care spending has grown much faster

than the national average, driven primarily by faster growth in commercial prices.2013 CT Reportat 12-15; 2014CT Supplementat 8.

o Price increases include changes in unit price (the price paid per unit of service byparticular payers to particular providers) and changes in provider mix (whetherservices are obtained in higher-priced or lower-priced care settings). 2013 CTReportat 11.

o Massachusetts has 10% more inpatient hospitalizations (adjusted for age) and72% more hospital outpatient visits per capita than the U.S. average. 2013 CTReportat 10.


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B. Delivery System Trends1.

Providers and Site of Care

The Massachusetts delivery system provides care in more expensive settings, onaverage, than the nation as a whole:o The Massachusetts delivery system is characterized by greater capacity and

greater use of major teaching hospitals than the national average, with 40% ofMedicare discharges in these types of hospitals for Massachusetts residentscompared to 16% nationwide. 2013 CT Reportat 17.

o Hospitals in Massachusetts that receive higher rates of reimbursement and incurgreater operating expenses do not consistently achieve higher levels of qualityperformance, even after adjustments for case mix and regional wage levels. 2013

CT Reportat 30-32. Many patients leave their home regions for inpatient care and seek care in Metro

Boston; the Metro Boston region has a net inflow of nearly 70,000 non-emergency,non-transfer hospital discharges per year, while every other region in the state has anet outflow of patients. 2014 CT Supplementat 25.o Of patients who leave their home region to seek care in Metro Boston, 81% go to

major teaching hospitals and 47% go to Partners hospitals. 2014 CT Supplement,Technical Appendix.

In recent years, the increase in prices paid has been the biggest

contributor to commercial spending growth

* Analysis is based on a sample that consists of claims submitted by the three largest commercial payers Blue Cross Blue Shield of Massachusetts (BCBS), Harvard Pilgrim Health Care

(HPHC), and Tufts Health Plan (THP) representing 66 percent of commercially insured lives. Claims-based medical expenditure measure excludes pharmacy spending and payments made

outside the claims system (such as shared savings, pay-for-performance, and capitation payments). (1 + overall spending growth) = (1 + changes in price index) x (1 + changes in utilization) / (1+ changes in health status)

SOURCE: HPC analysis of the All-Payer Claims Database

Increase in

prices paid

(may reflect

unit prices and

changes inprovider mix)

Decrease in

spending at

standardized

prices

No notable

change in

average risk

scores from

2010 to 2012

Increase in per

member per

month claims-

based medical

expenditures

Changes in

price index

Changes in

utilization

Changes in

health status

Overall

spending

growth

Percent annual growth in claims-based medical expenditures, 2010-2012

DRIVERS OF GROWTH IN CLAIMS-BASED MEDICAL EXPENDITURES* IN MASSACHUSETTS

a b c


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Inpatient care is growing increasingly concentrated in several large systems. In 2009,the top five systems accounted for 43% of all discharges and 48% of commercialdischarges. In 2014, we estimate the top five systems will account for 50% of alldischarges and 56% of commercial discharges (55% and 61% if Partners completesits proposed acquisitions of SSH and Hallmark, with Partners share of dischargesgrowing from 24% to 32% in five years and becoming greater than the combinedshares of the next four highest-volume systems). 2014 CT Supplementat 27.

Legend

Inflow*

Outflow

100K

50K

10K

Most Massachusetts residents who leave their home region for inpatient

care seek their care in Metro Boston

* Discharges at hospitals in region for patients who reside outside of region Discharges at hospitals outside of region for patients who reside in region

SOURCE: Center for Health Information and Analysis; HPC analysis

Number of inpatient discharges for non-emergency, non-transfer volume, 2012

DISCHARGES FLOWS IN AND OUT OF MASSACHUSETTS REGIONS

BerkshiresPioneer Valley /

Franklin

West Merrimack/ Middlesex

New

Bedford

Metro

South

South

Shore

Cape andIslands

Lower NorthShore

Upper North Shore

East

Merrimack

Central

Massachusetts

Metro

West

Norwood /

AttleboroFall

River

MetroBoston

-5K

-1K

-6K

-1K

-2K

-1K

-1K

-12K

-5K

-5K

-9K

-4K

-7K

-9K

+68K


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2. Payment and Insurance Trends Chapter 224 encouraged a shift from the fee-for-service payment system to

alternative payment methods (APMs). In 2012, 29% of insured Massachusettsresidents were covered by APMs. 2014 CT Supplementat 31.

Continued expansion of APMs has faced countervailing trends. While payers haveenrolled new provider organizations in these contracts, these contracts currently onlyextend to patients on HMO/POS plans, which require patients to designate a primarycare provider. In the last few years, the proportion of patients on HMO plans hasdeclined as PPO plans have grown in popularity. 2013 CT Reportat 20-21.

C. Overview of the Parties1. Partners HealthCare System Partners owns eight general acute care hospitals in five regions of the state (the

addition of SSH and Hallmark would make it eleven) and negotiates contracts onbehalf of approximately 6,200 physicians. Partners also owns a network ofpsychiatric hospitals, rehabilitation facilities, and home care facilities.PHS-HHCPreliminary Reportat 7;PHS-SSH-Harbor Final Reportat 7-8. It is the largest

24% 25% 26%32%

7%8% 8%

8%7%

7% 7%

7%7%

7%8%

8%5%

7%

7%

4%

61%

2014 estimate

(after PHS

transactions)

2014 estimate*

56%

2012

51%

2009

48%

* 2014 data not yet available. Based on applying systems established by 2014 (including 2013 Partners HealthCare acquisiti on of Cooley Dickinson and 2014 Lahey Health acquisition ofWinchester hospital) to 2012 inpatient discharge data

Includes South Shore Hospital and Hallmark Health hospitals within Partners HealthCare System

SOURCE: Center for Health Information and Analysis; HPC analysis

Lahey Health (2012, 2014)

South Shore Hospital (2009)

Beth Israel Deaconess

UMass Memorial Health Care

Caritas Christi /Steward Health Care System

Partners HealthCare System

Share of commercial inpatient discharges held by five highest-volume systems, 2009-2012

CONCENTRATION OF COMMERCIAL INPATIENT CARE IN MASSACHUSETTS

Commercial inpatient care in Massachusetts has grown more

concentrated among large hospital systems over the past 5 years


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hospital system and physician group in Massachusetts, receiving nearly one-third ofstatewide payments to acute hospitals and approximately one-quarter of statewidepayments to physician groups in 2011. PHS-HHC Preliminary Reportat 21-22.

Partners total net assets are more than double the combined assets of the next fivelargest systems in Massachusetts. Its total operating revenue increased by

approximately 20% in the last four years, from $7.5 billion to nearly $9 billion, andits total net assets grew by 6.2% (over $300 million). PHS-HHC Preliminary Reportat 16-17.

Partners hospitals generally receive the highest prices in their region, an example ofwhich is shown in the chart below. PHS-HHC Preliminary Reportat 22-23;PHS-SSH-Harbor Final Reportat 14-15.

Partners physician groups also receive higher prices and have higher health statusadjusted total medical expenses than nearly all other physician groups inMassachusetts. PHS-HHC Preliminary Reportat 23-25;PHS-SSH-Harbor FinalReportat 15-17.

Nantucket Cottage

Cooley*Faulkner

BWH & MGH

Newton-Wellesley

Martha's Vineyard

NSMC

Hallmark

0

0.5

1

1.5

2

2.5

Relative

Price

Partners' Owned Hospitals Area Hospitals Hallmark (Partners Affi liated)

Newton/

WellesleyCape &

Islands

North of

Boston

Boston

Community

Hospitals

Boston

AMCsPioneer

Valley

Relative Prices for Hallmark and Partners Hospitals Compared to Other Area

Hospitals (BCBS 2012)

Area hospitals: Pioneer Valley (Baystate MC, Holyoke, Mercy MC, Noble); Boston Community (Carney, Norwood,

St. Elizabeth's MC); Boston AMCs (BIDMC, BMC, Tufts MC); Newton/Wellesley (BID-Needham, Metrowest MC,

Mt. Auburn); Cape & Islands (Cape Cod, Falmouth); North of Boston (Addison-Gilbert, Beverly, Cambridge Health

Alliance, Lahey MC, Mt. Auburn, Winchester)

*Cooley owned by Partners as of July 1, 2013.


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Partners has continued to grow in recent years, acquiring Neighborhood Health Plan, aMassachusetts payer with over 260,000 members, and Cooley Dickinson Hospital inNorthampton, in 2012 and 2013, respectively. PHS-HHC Preliminary Reportat 8;PHS-SSH-Harbor Final Reportat 8.

2. South Shore Hospital SSH is the largest hospital in its region, with net patient service revenue that is nearly

double that of the next largest hospital in the region. PHS-SSH-Harbor Final Reportat 13. Its managed care network, South Shore Physician Hospital Organization(SSPHO), includes about 400 physicians. PHS-SSH-Harbor Final Reportat 9.

SSH is in strong financial condition, with total operating revenue and total net assetssubstantially greater than those of area hospitals. Between 2009 and 2012, its totalnet assets grew by 32.9% (over $44 million).PHS-SSH-Harbor Final Reportat 13.SSPHO is the seventh largest physician group in the state as measured by 2011

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Signature Brockton

PHO

Southcoast Physicians

Network

SSPHO NEQCA BIDPO Steward PCHI Atrius

Relative Prices for PCHI and SSPHO Compared to Other Area Physician Groups (HPHC 2011)

$350

$370

$390

$410

$430

$450

$470

$490

*Does not include pediatric groups

Health Status Adjusted TME of Hallmark, Partners and Other Major Provider Groups in Northeastern Massachusetts

(One Major Commercial Payer, 2012)


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payments from nine of the largest commercial payers in Massachusetts. PHS-SSH-Harbor Final Reportat 18.

SSH is the highest priced hospital among area hospitals. While SSPHO physicianshave not had high prices compared to area physician groups, they have among thehighest TME of area groups. PHS-SSH-Harbor Final Reportat 14-17.

3. Hallmark Health Hallmark includes two general acute care hospitals, Melrose-Wakefield in Melrose

and Lawrence Memorial in Medford, a number of outpatient facilities, and a managedcare network of approximately 400 physicians. PHS-HHC Preliminary Reportat 9.

Hallmarks financial position is positive and improving. Its operating margin andtotal margin are consistently high compared to area community hospitals and its cashreserves and current ratio are strong. PHS-HHC Preliminary Reportat 18-19.

Hallmark contracts through Partners with most of the major payers, but its hospitaland physician prices and health status adjusted TME are consistently lower than those

of Partners owned hospitals and physician groups. PHS-HHC Preliminary Reportat22-25.

D. Impact of the Proposed Transactions Provider alignments and consolidations impact health care system performance and

levels of medical spending. Shifting physician alignments, changes in marketconcentration, and changing site of care (provider mix) can all impact the prices wepay for health care services. PHS-HHC Preliminary Reportat 40-41;PHS-SSH-Harbor Final Reportat 28-29.

Changes in total medical spending are driven by four principal factors: unit price,utilization, provider mix, and service mix. Provider consolidations or alignments canaffect all of these factors, resulting in:o Changes in bargaining leverage, or shifts in incentives to use existing bargaining

leverage, which impact providers negotiation ofcommercial prices and othercontract terms;

o Changes in physician, hospital, or other facility prices as consolidations oralignments change the affiliations of provider groups;

o Changes in site of care, or use of differently priced providers, as physicians shiftwhere they send their patients for care in response to consolidations oralignments; and

o Changes in the nature or amount of services patient populations utilize as a resultof proposed care delivery changes. PHS-HHC Preliminary Reportat 41;PHS-SSH-Harbor Final Reportat 29.

1. Partners-South Shore Hospital-Harbor Medical AssociatesOver time, for the three major commercial payers studied, Partners acquisition of SSHand its related physicians is anticipated to increase total medical spending by $23 millionto $26 million each year as a result of increases in physician prices and shifts in care to


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higher-priced Partners and SSH facilities. The resulting system is anticipated to haveincreased ability to leverage higher prices and other favorable contract terms innegotiations with commercial payers, the costs of which are not included in the aboveprojection. Overall, increases in spending are anticipated to far exceed potential costsavings from expanding Partners existingpopulation health management initiatives into

the South Shore region.PHS-SSH-Harbor Final Reportat 2.

Bargaining Leverage/Market Dynamics

SSH and Partners are direct competitors, with respectively the first and second largestshares of commercial inpatient services in SSHsprimary service area (PSA). PHS-SSH-Harbor Final Reportat 39-40. This proposed merger will substantially reducecompetition in SSHs PSA and increase the ability of the resulting system to leveragehigher prices and other favorable contract terms. PHS-SSH-Harbor Final Reportat36-44.

The resulting system will account for 50% of commercial discharges in SSHs PSA,with a corresponding increase in market concentration of 1,254 (as measured throughthe Herfindahl-Hirschman Index (HHI)). This increase in market concentration iswell over the Department of Justice/Federal Trade Commission threshold abovewhich mergers are presumed likely to enhance market power (an increase in HHI of200 in similarly concentrated markets). PHS-SSH-Harbor Final Reportat 41.

Unit Price

Physicians

As a subset of SSPHO physicians (including Harbor Medical Associates) joinPartners contractspursuant to existing contract provisions, increases in physician

prices will increase spending for the three major commercial payers by an anticipated$15.8 million per year. PHS-SSH-Harbor Final Reportat 33. If additional SSPHOphysicians are permitted to join Partners networkunder more expansive contractprovisions, annual spending by the three major commercial payers would increase byup to $50.9 million. PHS-SSH-Harbor Final Reportat 34.

Hospitals

Significant increases in market concentration, particularly in concentrated marketsl

public comments on partners healthcare deal

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