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Partners hospitals, doctors top health-payment list

State analysis affirms stature

Nearly one-third of all the money that Massachusetts insurers spent on acute hospital care last year went to Partners HealthCare, according to a new Patrick administration analysis that underscores the dominance of the state’s largest medical provider.

In addition, Partners-affiliated doctors received 25 percent of the money paid to physicians in 2011. In both cases, Partners received two to three times as much as the providers receiving the next most in payments.

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The findings are part of the first annual report on the Massachusetts health care market, which was required by the 2012 health care cost-control law. The state planned to release the report Wednesday and provided a draft copy to the Globe.

Partners, which received 31 percent of hospital payments, said the amount reflects the fact that it treats far more patients than any other provider in the state, and executives said they are working aggressively to reduce their costs.

The analysis will help regulators and lawmakers decide how to best control medical costs, which have been soaring over the past decade. Between 2009 and 2011, health insurance premiums rose by 9.7 percent, the report found. At the same time, insurance benefits fell by 5 percent.

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One potential problem that state leaders are monitoring closely is increased consolidation among hospitals and doctors. Providers argue that by merging they can be more efficient, but larger groups often have the leverage to demand higher prices from insurers.

Dr. Paul Hattis cites the higher share of health care costs being paid by employees.

Partners was formed in 1994 by the Harvard teaching hospitals Massachusetts General and Brigham and Women’s, and now includes 10 hospitals and 6,000 doctors. It has become not only the most prestigious health care system in the state but also one of the most expensive.

Overall, 80 percent of insurance payments went to the providers that charge the highest prices, including Partners, Berkshire Health Systems, and Atrius Health, making it clear that cutting spending on medical care will depend in part on controlling payments to these systems, the report said. The newly formed Center for Health Information and Analysis prepared the report. Its executive director, Aron Boros, was not available for comment Tuesday.

After Partners, hospitals associated with Caregroup, including Beth Israel Deaconess Medical Center, received about 10 percent of the money spent on hospital care, while Atrius received 11 percent of all dollars spent on physician services.

The report “clearly puts a number on what we knew to be the case,” said Stuart Altman, a Brandeis University professor and chairman of the state’s new Health Policy Commission, which was created by the 2012 law to try to hold health spending increases below an annual target of roughly 3.7 percent a year. “We have known for a long time that Partners is the king of the hill.”

Altman said the report underlines “why we are the most expensive state in the US. It’s because of the structure of our system,’’ which leads residents to “use expensive teaching hospitals,” including those owned by Partners, more often than people in other states.

Partners recently completed a merger with Cooley Dickinson Hospital in Northampton and is trying to add South Shore Hospital in Weymouth to the organization. The Health Policy Commission is reviewing the merger. So is the US Justice Department’s Antitrust Division in partnership with the state attorney general’s office, which are seeking to gauge whether it would be anticompetitive.

Altman said that the commission’s review is ongoing. “Partners might claim they are more efficient. But does [a merger] add more services or boost up the price? One of the big issues is, when Partners gets hold of an entity, it also extracts bigger prices.’’

Partners spokesman Rich Copp said the company is moving to control medical expenses, including both the price and volume of services.

Given that “more than 1.5 million patients each year choose to receive their care at a Partners hospital or from a Partners physician’’— representing about a quarter of the Massachusetts population — the report’s findings are not surprising, he said.

Copp said Partners hospitals provide services — trauma care, mental health care, substance abuse treatment, and rehabilitation — that many others do not.

He pointed out that some data in the report are from 2010 and 2011, and that in 2012 Partners succeeded in slowing the rate of growth in health care costs both for its Medicare patients and many of its privately insured patients.

Several health care executives said the medical spending picture is improving as health plans and providers focus more on holding down costs, but there is still a long way to go.

“Employees are being asked to pay more and more of our total health care,’’ said Dr. Paul Hattis, a professor at Tufts School of Medicine and a member of the Health Policy Commission.

“None of that to me says the cost burden for consumers is actually getting less.’’

Liz Kowalczyk can be reached at kowalczyk@globe.com.
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