Business
    Next Score View the next score

    Partners’ deal with doctors group under fire

    AG says latest expansion plan will drive up costs

    Attorney General Maura Healey wants a focus on lowering costs.
    Attorney General Maura Healey wants a focus on lowering costs.

    Just five weeks after its plans to merge with a big suburban hospital were rebuffed, the state’s most powerful health system is moving to complete an acquisition of a smaller doctors group that will strengthen its foothold in the Eastern Massachusetts medical market.

    The move by Partners HealthCare to take over Harbor Medical Associates, a practice of about 70 physicians on the South Shore, immediately drew fire from Attorney General Maura Healey. She said the action was inconsistent with recent comments by the new chief executive of Partners, who said he would reevalutate expansion plans.

    Partners, based in Boston, already owns 10 hospitals, including Massachusetts General and Brigham and Women’s, and is the state’s highest-cost health care system. In February it withdrew plans to merge with South Shore Hospital in Weymouth after opposition from Healey, among others.

    Advertisement

    “Partners needs to demonstrate it’s taking steps to drive down costs,” Healey said in an interview. “The Harbor transaction is more growth and expansion — acquiring additional doctors — and Partners itself acknowledged it will result in higher reimbursement rates.”

    Get Talking Points in your inbox:
    An afternoon recap of the day’s most important business news, delivered weekdays.
    Thank you for signing up! Sign up for more newsletters here

    The attorney general said Partners’ executives explained their plans in a meeting at her office last week. Healey said she doesn’t have a case to support an antitrust lawsuit to stop the transaction. Without the threat of a lawsuit, Partners has a clear path to close the deal, which will extend its reach to thousands more patients.

    “I am very disappointed,” Healey said. “I urge them not to move forward.”

    Partners’ latest move came days after Dr. David Torchiana became chief executive at the nonprofit health system. Torchiana, a cardiac surgeon and longtime Mass. General executive, took charge as Partners faced widespread criticism over plans to expand its network.

    In January, a Superior Court judge rejected a deal that would have allowed Partners to acquire three hospitals, including South Shore. The judge made her decision after Healey voiced opposition to the proposal.

    Advertisement

    After that setback, Partners decided to give up its bid for South Shore Hospital.

    But acquiring Harbor Medical is still a key ingredient of Partners’ strategy to coordinate care for large populations of patients, spokesman Rich Copp said.

    “Our goal in working with Harbor Medical Associates is to improve patient care in the region,” Copp said. “Over the long run, better coordinated care will improve outcomes and help bend the cost curve.”

    Harbor Medical’s chief executive, Dr. Peter A. Grape, and Brigham and Women’s Hospital’s president, Dr. Elizabeth G. Nabel, added in a joint statement that the deal will give South Shore patients better access to specialists at Brigham.

    Adding Harbor Medical to its physician network — already 6,000 strong — will allow Partners to raise the prices those doctors charge. The state Health Policy Commission, which tracks medical spending, has said Partners’ acquisition of Harbor Medical would permanently raise prices by more than 41 percent a year, adding $8 million to annual spending.

    Advertisement

    “In closing this deal, there’s no added value for the community, only a Partners premium price to pay,” said Dr. Paul Hattis, a member of the commission and a professor at Tufts University Medical School. “This is really not at all in the spirit of what Dr. Torchiana noted a few weeks ago when he was named CEO.”

    ‘In closing this deal, there’s no added value for the community, only a Partners premium price to pay. This is really not at all in the spirit of what Dr. Torchiana noted a few weeks ago when he was named CEO.’ --Dr. Paul Hattis, Health Policy Commission

    Partners has yet to file its updated plans with the commission, which reviews all major health care industry deals.

    “Any movement [by Partners] would have significant implications for the area and for health care spending,” said Stuart Altman, chairman of the commission. “Exactly what implications? We just have to wait until we get a formal proposal from them.”

    Copp said Partners is evaluating “an appropriate way to respond to some of the cost concerns that have been raised.”

    Harbor Medical is part of an elaborate plan by Partners to restructure medical services north and south of Boston. Besides its plan to take over South Shore Hospital, Partners had proposed acquiring community hospitals in Medford and Melrose. Partners argued those moves would lead to better care coordination for patients.

    But after Judge Janet L. Sanders rejected a settlement that would have allowed the hospital mergers — and Healey threatened to sue to block Partners’ acquisition of South Shore — Partners dropped its bid for the 378-bed hospital. The health system has not said whether it will move forward with the takeover of Hallmark Health System’s two North Shore hospitals.

    Healey said she remains skeptical about the Hallmark deal but stopped short of saying that she would sue to block it.

    “First, we need to see if Partners wants to go forward,” she said. “We’re going to do our job, do our review.”

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