Partners HealthCare fired back Friday at a state commission’s report that said its proposed takeover of community hospitals in Medford and Melrose would raise medical spending by up to $23 million a year.
In a response to the Health Policy Commission, Partners and its acquisition target, Hallmark Health System, said the commission used flawed methodology and ignored important facts in reaching its conclusions.
“This transaction is a unique opportunity to support our mission in the northern corridor, realize an entirely new vision for care delivery, and restore financial health to [Hallmark] and its neighboring Partners facility, North Shore Medical Center,” the response states. “We are disappointed in — and strongly disagree with — the conclusions in the preliminary report that summarily dismissed the affirmative aspects of the transaction.”
The Health Policy Commission studies hospital mergers but cannot block them, only refer them to the attorney general for further review. Last month the commission said the Partners bid to acquire the Hallmark hospitals — Lawrence Memorial in Medford and Melrose-Wakefield in Melrose — will raise health care spending by $15.5 million to $23 million a year, increase insurance premiums, and reinforce the market power of the state’s biggest health system.
But Partners said its analysis shows the merger would save $21 million a year, for the next five years, by reorganizing care across several facilities north of Boston.
“These are substantial savings that [Hallmark] would be unable to achieve absent the transaction,” Partners said.
The exchange between Partners and the commission is similar to what occurred several months earlier when commissioners raised concerns about Partners’ plan to acquire South Shore Hospital in Weymouth. Partners replied to those charges in January, also accusing commissioners of using flawed reasoning and releasing a report with “inexplicable omissions.’’
Meanwhile, Attorney General Martha Coakley reached an agreement with Partners that would allow it to acquire the Hallmark hospitals and South Shore, but would set other limits on the company’s growth for up to a decade.
The settlement is pending in court while members of the public file comments. The Health Policy Commission submitted its concerns as part of the public comment process.
The settlement has drawn criticism from rival health care companies, politicians, and industry experts, who argue the deal will not stop Partners from increasing its already formidable market power and pushing prices higher.
Partners is the state’s largest and highest-cost health care provider. It owns Brigham and Women’s and Massachusetts General hospitals, which rank not only among the best in the country, but also the most expensive. Partners’ system also includes other hospitals and health centers, a health plan, and a network of about 6,000 doctors.
Upon acquiring the Hallmark hospitals, Partners plans to convert the Medford facility to a short-stay hospital, while renovating the Melrose facility. It also plans to restructure services at its own North Shore Medical Center, which operates hospitals in Salem and Lynn. These changes, Partners executives say, will help them provide better care in lower-cost settings.
The Health Policy Commission will examine Partners’ comments and draft a final report over the next several weeks.
“The HPC’s findings, released in July, were reached after detailed study and objective analysis of information from the parties and other market participants, in addition to publicly available data,” Stuart Altman, chairman of the commission, said in a statement. “We look forward to reviewing the submission by Partners and Hallmark Health System and, where appropriate, updating our analyses in preparation of a Final Report.”
Coakley declined to comment.
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