Hospital industry split over health care legislation

The hospital industry in Massachusetts is sharply divided on proposed legislation that could make it harder for health systems to continue the wave of mergers and acquisitions that have been altering the medical landscape.

The legislation would strengthen the role of the Health Policy Commission, a state agency that reviews health care mergers, and give the attorney general more power to block deals if the agency projects they would result in higher costs for consumers.

Two prominent health systems, Lahey Health System Inc. of Burlington and Steward Health Care System of Boston, back the legislation, while the statewide trade group that represents hospitals, the Massachusetts Hospital Association, came out against the measure Thursday.

“It is premature to make such changes that could have a significant impact on so many hospitals and health care providers,” said Timothy F. Gens, executive vice president of the hospital group.

But Dr. Howard Grant, the chief executive of Lahey Health, said the bill is consistent with his company’s goals of containing costs. Lahey owns four hospitals, most recently acquiring Winchester Hospital last year. The Health Policy Commission did not object to that deal.

“We are willing to be accountable for any type of transaction or affiliation we pursue with another hospital or health system or physician group,” Grant said. “Any affiliation of that type should be able to withstand public scrutiny.”

Steward, the largest for-profit hospital chain in Massachusetts, also supports the bill.

“In an increasingly more complicated health care marketplace, we believe that the Health Policy Commission needs more power to scrutinize health care mergers in order to protect the best interests of patients,” Steward spokeswoman Brooke Thurston said.

Lahey and Steward share unusual company in support of the bill. The Massachusetts Association of Health Plans, which represents insurers and is often at odds with the hospital industry, also favors it.

The Health Policy Commission was created in 2012 to monitor medical spending and review mergers and acquisitions that have the potential to shake up the market.

The commission does not have the authority to block mergers, but can refer deals to the attorney general for further review. Still, it remains unclear whether the commission’s conclusions carry weight in court.

To clarify that role, the current attorney general, Maura Healey, and House Majority Leader Ronald Mariano, a Quincy Democrat, filed a bill last month to strengthen the commission. The legislation would allow Healey to use the commission’s reports as evidence in court to temporarily block mergers.

So far, the commission’s reports have focused on Partners HealthCare, the biggest health system in the state, and Lahey. It found that Partners’ proposed acquisitions of South Shore Hospital in Weymouth and Hallmark Health System’s hospitals in Medford and Melrose together could raise medical spending as much as $49 million a year, while increasing Partners’ market power.
Partners contested the commission’s findings but, under pressure from Healey, ultimately gave up its bid for South Shore Hospital and put the Hallmark deal on hold.

When the commission studied Lahey’s proposed acquisition of Winchester, it found the deal could save as much as $2.7 million a year because of lower physician prices and more patients moving from higher-priced Boston hospitals to Lahey’s facilities.

Healey has been highly vocal about controlling health care costs since becoming attorney general in January. Within days of being sworn in, she threatened to sue Partners if it went forward with its acquisition of South Shore.

“Our legislation to strengthen the impact of the Health Policy Commission’s reporting process is critical to our ability to provide residents with access to affordable, high-quality health care across Massachusetts,” said Christopher Loh, Healey’s spokesman.

Apart from Lahey and Steward, the state’s other large health systems have said little publicly about the bill.

“We’ve raised some initial concerns with the MHA and we will work collaboratively with the MHA and the rest of the hospital community to address those concerns,” said Rich Copp, spokesman for Partners.

A Beth Israel Deaconess Medical Center spokeswoman, Jennifer Kritz, said, “This is a significant proposal, and we look forward to the public discussion around the legislation.”

Anthony Berry, spokesman for UMass Memorial Health Care of Worcester, said the system’s leaders have not yet had a chance to discuss the bill.