The scalpels are out for Partners HealthCare as it tries to get even bigger, but Gary Gottlieb is not taking it personally.
He’s CEO of a company — excuse me, “system” — that every other health care organization loves to hate.
Rival hospitals, from Beth Israel Deaconess to Lahey Health, have ganged up on the Goliath, objecting to a proposed settlement with Martha Coakley that would allow Partners to expand again by taking over three additional hospitals.
They’re worried that a more powerful Partners would lock in price advantages, drive up costs, and make it difficult for competitors to survive.
“I don’t think it’s a matter of being hated,” Gottlieb told me earlier this week, sitting in his 11th-floor office in the Prudential Center. “It’s really about prices and costs more than anything else.”
Gottlieb, who is a psychiatrist by training, admitted there have been “awkward moments” when he’s bumped into other health care executives around town. So far, those encounters have not resulted in any visits to the emergency room.
“Nobody has come up and pointed a finger in my face,” Gottlieb said, “and I certainly have not done the same.”
That’s a bit of a surprise, given the rancor on display in court and in the media. Maybe health care types prefer to stab each other in the back rather than in the face.
To Gottlieb, the Partners settlement, which would also cap its prices for much of the next decade, opened a long-festering wound. Hospital executives are anxious about how Obamacare will change the way providers and insurers are paid. Consolidation has spread like a virus in the industry as hospitals circle the ambulances. Analysts say their future largely depends on becoming larger and gaining more bargaining leverage.
“Everybody has a higher degree of uncertainty about what the future is going to look like,” Gottlieb said. “That creates a higher degree of tension around planning, around competition.”
And as if tensions weren’t running high enough, The New York Times weighed in on Monday with an editorial that called the creation of Partners in 1994 “a serious mistake.”
“The experience in Massachusetts offers a cautionary tale to other states about the risks of big hospital mergers and the limits of antitrust law as a tool to break up a powerful market-dominating system once it is entrenched,” it said.
The editorial proposed that the Legislature launch an inquiry into whether the public has benefited from the merger of Massachusetts General and Brigham and Women’s, which marked the formation of Partners. Perhaps, it suggested, the state should look into whether the union should be undone.
As far as I can tell, the Legislature isn’t doing anything about the deal. And based on my inquiries, members aren’t reading the Times too closely.
Gottlieb said he agreed with one point in the editorial — it called Partners a leader in working with hospitals and doctors to control costs and improve care. The rest? Well, it belongs in the recycling bin.
“The formation of Partners has been a great thing,” Gottlieb said. “Care has gotten so much better.”
He started ticking off some reasons for his upbeat diagnosis. Partners turned around Newton-Wellesley, a hospital that was losing $1 million a month, and stabilized the Faulkner, in part by moving over procedures from the Brigham.
The settlement, he believes, will curtail Partners’ growth. “It will make us certainly among the most regulated health care institutions in the United States, by a substantial factor,” Gottlieb said.
Even so, the reality is that Partners, which has 10 hospitals and over 6,000 doctors, wields incredible market clout with a system that is roughly three times the size of its closest competitor. A 2008 Globe Spotlight series showed Partners charged up to 60 percent more for essentially the same procedures being done at other hospitals. Coakley’s settlement — after a five-year investigation — is supposed to narrow price disparities. We’ll see.
But despite Gottlieb’s concerns, he must know that the Coakley pact is a good one for Partners. It ends the investigation and lets Partners acquire again, in particular, the coveted South Shore Hospital in Weymouth.
The chain’s rivals are squawking because it’s now or never. If the settlement is finalized as is, expect those same competitors to bulk up against their nemesis by merging and forming new alliances. That might be the only medicine to fight off the Partners effect.