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Amended Partners deal would impose stricter price caps

Attorney General Martha Coakley is asking a judge to approve an amended deal with Partners HealthCare that imposes stricter price caps before allowing the state’s biggest health system to acquire three more hospitals.

Coakley filed the amended settlement in Suffolk Superior Court on Thursday, where it awaits the approval of Judge Janet L. Sanders.

Boston-based Partners, a system that includes about 6,000 doctors and several hospitals, has sought to acquire South Shore Hospital in Weymouth and Hallmark Health System’s hospitals in Medford and Melrose. While critics concerned about Partners’ high prices and formidable market power wanted Coakley to sue to block the mergers, she reached a settlement to allow the takeovers to go through.

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Coakley, the Democratic nominee for governor, said the amended settlement puts sufficient limits on Partners to protect consumers while allowing its expansion. “These additional concessions will mitigate the potential for higher prices related to this transaction,” Coakley said in a news release.

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Coakley began renegotiating a portion of the original deal with Partners after the Health Policy Commission, a state watchdog group, said Partners’ acquisition of Hallmark would raise health care costs as much as $23 million a year without necessarily improving the quality of care.

The amended deal caps prices at Hallmark to the rate of inflation for 6½ years, similar to a provision in the agreement capping price increases at South Shore Hospital. Partners also agreed to preserve psychiatric and behavioral health services at its North Shore facilities for five years.

Stuart Altman, chairman of the Health Policy Commission, praised the new restrictions. “I commend the attorney general for pushing Partners to mitigate the price impact of the Hallmark transaction, one of the major concerns identified in our report,” he said in a prepared statement.

The proposed settlement will be discussed at a court hearing on Monday.

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Scores of people have weighed in on Partners’ planned mergers by submitting remarks during a court-authorized public comment period. The comments were split among supporters and opponents.

Many consumers and local officials said they wanted Partners, renowned for its high-quality care, to expand in their communities. But others, including antitrust specialists and academics who study health care, said Partners is already too expensive and wields too much market power.

The health system’s rivals, including Beth Israel Deaconess Medical Center, Tufts Medical Center, and Lahey Health, oppose the mergers. A trade group representing the insurance industry has said Coakley’s deal won’t cure the “dysfunction” of market pricing that allows Partners to collect higher payments than its competitors.

In a 73-page response to the public comments, Coakley again defended her strategy for dealing with Partners. She said the remedies achieved in the settlement would be “immediate and effective,” while avoiding a lengthy court battle with an uncertain outcome.

“It advances the public interest,” Coakley said of the settlement in her court filing.

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The agreement would include restrictions on how Partners contracts with insurers and gives the insurers more choice over which Partners facilities to include in their plans. It would also limit Partners’ expansion over the next seven years and require the health system to pay for a monitor to track its progress for a decade.

Partners submitted its own comments to the court Thursday, as did Hallmark and South Shore, all asking for swift approval of the mergers. Partners has argued that the mergers would help control health care costs by making the system more efficient.

Partners lawyers said in their filing that the Health Policy Commission’s findings are just a piece of the extensive research that went into drafting the settlement.

“The Attorney General’s Office and the Department of Justice reviewed over 4 million pages of materials from Partners . . . deposed over 30 officials of the parties; interviewed numerous third parties . . . and participated in several meetings,” the lawyers said.

Partners was created through a 1994 merger between Boston’s Massachusetts General Hospital and Brigham and Women’s Hospital and now includes several community hospitals and other facilities.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.