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Rivals warn Partners’ growth will raise costs

Say some hospitals may shut

The planned Partners expansion “takes an organization that’s already three times larger than everyone else and makes it four times larger,” said Dr. Howard Grant, Lahey’s chief executive.

Jonathan Wiggs/Globe Staff

The planned Partners expansion “takes an organization that’s already three times larger than everyone else and makes it four times larger,” said Dr. Howard Grant, Lahey’s chief executive.

A coalition of Massachusetts health care providers that compete with Partners HealthCare on Tuesday declared its opposition to a tentative pact allowing Partners to acquire at least three more hospitals, saying the expansion would have “profound and negative effects on the cost of health care” and possibly lead to the “extinction” of some hospitals.

Leaders of the group — including executives from Tufts Medical Center, Beth Israel Deaconess Medical Center, Lahey Health, and Atrius Health — outlined their “grave concerns” about a deal struck between state Attorney General Martha Coakley and Partners, the state’s largest hospital and physicians network.

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“This agreement does not address the issue of costs and the disparity in payments” between Partners hospitals — including Harvard-affiliated Massachusetts General and Brigham and Women’s — and their rivals, said Tufts Medical Center president Michael Wagner.

The opposition, in the form of letters to Coakley and a top deputy, marks the first time the competitors have publicly challenged the agreement in principle between Partners and the attorney general’s office.

The agreement would let Partners complete takeovers of three hospitals, South Shore Hospital in Weymouth and two hospitals operated by Hallmark Health north of Boston, and add at least 550 doctors. It would also limit how much Partners can charge for medical services and restrict further growth for five to 10 years.

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The coalition — which also includes Cambridge Health Alliance, Mount Auburn Hospital, New England Baptist Hospital, Lowell General Hospital, Signature Healthcare, and Anna Jaques Hospital — called on the attorney general’s office to open the deal with Partners for public scrutiny before it goes to a Suffolk Superior Court judge for final approval. The judge could get the deal as early as next week.

The letters suggest the agreement, meant to help control health costs by restraining Partners’ market power, could have the opposite effect by locking in advantages Partners already holds. A longstanding gap between the prices Partners commands for medical care and what others can charge would be preserved or increased under the pact, the competing health providers said, even though the agreement places a cap on health care prices. The rivals also doubt the effectiveness of a provision — also meant to control costs — allowing health insurers to contract separately with Partners’ teaching hospitals and community hospitals.

Coakley’s office announced its agreement in principle last month, but thus far has released only a summary while it negotiates final terms. It would effectively end a five-year antitrust investigation — conducted jointly by her office and the US Department of Justice — into Partners’ market dominance and contracting practices.

“Based on the little that has been publicly disclosed,” the competitors wrote, “this continued growth [of Partners] will increase the already high cost of health care in Massachusetts, draw scarce resources away from public investments, place further strains on businesses and employers, and threaten extinction for some hospitals that provide cost-effective services in their local communities.”

Brad Puffer, a spokesman for Coakley’s office, defended the deal reached with Partners, but said for the first time that the attorney general would be agreeable to some unspecified public comment. He did not address specific points raised by the Partners competitors, noting that terms of the final pact are still being negotiated.

“We have received the letter and are reviewing it,” Puffer said. “Our agreement in principle would help to control costs and level the playing field in the market. The negotiations are ongoing, but we are committed to being transparent and allowing for feedback should a final agreement be reached.”

The competitors called on Coakley to submit the final agreement to the state Health Policy Commission, enabling it to conduct a “market impact and cost review” before it is filed with the court. In their letter to Christopher Barry-Smith, the state’s deputy attorney general, they said the settlement “could undermine the ongoing role for the Health Policy Commission” by, among other things, signaling approval of hospital takeovers before the commission has examined whether they will increase costs.

“This deal could have a far-reaching impact,” said Kevin Tabb, chief executive of Beth Israel Deaconess. “And the public deserves to know the details and to ask questions.”

Partners vice president Rich Copp said Partners executives had not seen the letters.

Referring to Partners’ expansion plans, Copp said, “This has been a transparent process. It’s been a public process with the attorney general, the Department of Public Health, the Health Policy Commission, and the media. We’ll continue to work with the attorney general as we finalize this agreement.”

On Tuesday, Lora Pellegrini, president of the Massachusetts Association of Health Plans, which represents health insurers that contract with hospitals, joined in the call for public disclosure of the final agreement.

“Given the community’s great interest in this agreement, it seems to make sense that there be a public process in place so everyone can understand the terms of this agreement and the impact it will have on costs going forward,” Pellegrini said.

The hospitals’ letters come after the Greater Boston Interfaith Organization called for a review by the Health Policy Commission. Commission chairman Stuart Altman said his agency lacks legal authority to examine the deal. But the Partners competitors said nothing prevents Coakley from authorizing such a review.

“That was the reason they were created,” Lahey chief executive Howard Grant said of the commission.

By allowing Partners to acquire three hospitals while exempting its affiliated Emerson Hospital in Concord from a cap on further expansion and letting it add hundreds of doctors to its network, the pact “takes an organization that’s already three times larger than everyone else and makes it four times larger, with significant increases in reimbursement,” Grant said.

Cambridge Health Alliance chief executive Patrick Wardell said two of his system’s hospitals, Cambridge Hospital and Whidden Hospital in Everett, compete with Partners-owned Massachusetts General for patients in Everett, Malden, Revere, and Chelsea.

“With the agreement allowing the Hallmark acquisition to go through, it really impacts our ability to sustain ourselves in these communities,” Wardell said. “This could make it very difficult for us to compete.”

Atrius Health, a Newton-based alliance of doctors groups including Harvard Vanguard Medical Associates, refers patients to South Shore and Emerson hospitals. If their costs rise after being acquired by Partners, it could compromise the ability of Atrius physicians to provide lower-priced care under health insurance contracts that give them fixed budgets, said Rick Lopez, Atrius’s chief medical officer.

“We don’t think the proposed restrictions on health care prices are going to be effective,” he said.

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
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