Partners promises a new model for health care
Tells US investors that expansion will cut costs, improve coverage
SAN FRANCISCO — Facing challenges in their home state, top executives of Boston-based Partners HealthCare System told a national audience of investors Monday that they will create a bold “new medical model” by integrating hospitals and their medical services with insurance products and by drawing patients from across the country.
Speaking at the J.P. Morgan Healthcare Conference, Partners’ chief executive, Gary L. Gottlieb, said his organization, which owns Harvard-affiliated Massachusetts General and Brigham and Women’s hospitals in Boston, plans to improve medical care and lower costs by further expanding its network of community hospitals and primary care physicians in Eastern Massachusetts.
“We need to control our own destiny,” Gottlieb said before a standing-room-only crowd at the Westin St. Francis Hotel, during the industry’s largest global gathering of health care leaders and deal makers.
Among other moves, Gottlieb and chief financial officer Peter K. Markell hope to expand on a strategy to shift more routine health care to community clinics and hospitals, while marketing higher-priced specialty care at Mass. General and Brigham and Women’s to patients around the region and nationally.
They offered no timetable for this plan.
Partners, which also owns seven community hospitals and other facilities in Massachusetts, rang up revenue of $10.3 billion last year, making it the largest health care provider in New England. It attracted about $1.5 billion in outside research funding, including about $800 million from the federal government.
The Partners presentation in San Francisco came days after the massive hospital and doctors system disclosed it will sell $425 million worth of bonds to finance new construction and other expansion initiatives.
As Partners has grown, so has scrutiny of its market dominance, with critics saying the system’s size contributes to more expensive medical care.
The Massachusetts Health Policy Commission wants Attorney General Martha Coakley’s office to reject the organization’s latest attempt to grow, with the proposed acquisition of South Shore Hospital in Weymouth. A review by the watchdog agency concluded the merger could drive up costs and restrict competition for health care services south of Boston.
Later this week, Partners is expected to issue a rebuttal.
Coakley’s office is nearing completion of a four-year investigation, conducted with the US Department of Justice, into allegedly anticompetitive practices by Partners. Partners officials have said that expansion moves on the North and South shores will make it easier for them to integrate services, control costs, and treat more patients in community settings rather than in Boston.
Meanwhile, former Boston Mayor Thomas M. Menino last month lambasted Partners, the city’s largest private employer, for passing up land in Roxbury and deciding instead to consolidate administrative operations — and about 4,500 nonhospital employees — in a giant office complex being built at Somerville’s Assembly Row. Partners said the move to Somerville would be less expensive and afford easier commutes for its employees.
Partners executives did not discuss either issue Monday, but Markell noted the proposed acquisitions of South Shore Hospital and Hallmark Health System, which owns two hospitals north of Boston, are “going through the regulatory process.”
Gottlieb, for his part, made a veiled reference to the regulatory oversight.
“Like elsewhere, the Massachusetts marketplace is interesting and it’s dynamic,” he said. “It may be a little more interesting and a little more dynamic than elsewhere because the government has intervened for an extended period of time. That has intensified and exaggerated some downward cautionary pressures.”
To meet demands of patients, employers, and government officials for more-affordable health care, Partners executives said, they have contracted with insurers that reward doctors and hospitals for keeping patients healthy. Between patients covered by such contracts and those signed up by Neighborhood Health Plan — a Medicaid-managed care insurer Partners acquired in 2012 — it now has about 750,000 “lives under management,” Gottlieb said.
Partners may use that experience to offer its own commercial health insurance products to customers, executives said. Such products, if tailored as limited-network policies, could keep patients within the Partners system.
“We are working real hard to combine our insurance expertise with our provider expertise to create a new medical model,” Markell said.
He said Partners’ bond issue will help it finance ongoing capital improvement projects, such as renovations and new construction at Brigham and Women’s in Boston and elsewhere, as well as initiatives such as an information technology system that will improve efficiency by better managing patients’ records and data.
“Anyone who wants to step up to the plate and buy the bonds right now . . . we’ll take the orders,” Markell told investors.