A complex regulatory agreement can’t succeed without the full confidence of the public officials in charge of supervising and enforcing it. On Thursday, Superior Court Judge Janet Sanders rejected a proposed agreement under which Partners HealthCare would be allowed to acquire South Shore Hospital and two other suburban hospitals and expand its network of doctors. That was wise, because any consensus that might once have existed around the deal had long since evaporated.
Partners, the dominant force in health care in Massachusetts, must now decide whether to try to move forward with the acquisitions — against the threat of legal action by new Attorney General Maura Healey. Instead, Partners should take the hint from Healey’s court filing. The organization should establish a clear record of cost containment before expanding its market share.
The prestige of Partners’ two flagship hospitals — Massachusetts General and Brigham and Women’s — has allowed the organization to drive hard bargains with insurers, and has resulted in upward pressure on overall health care spending. Under last year’s agreement, the health care giant secured then-attorney general Martha Coakley’s acquiescence on its proposed expansion, and in exchange agreed to hard caps on its ability to raise prices and restrictions on how it negotiates with insurers.
Coakley’s team believed they’d used the proposed South Shore acquisition as a bargaining chip to obtain broader controls in how Partners conducted itself across the marketplace. Partners officials insisted they meant to be leaders in a national move toward better coordinated, more cost-effective care. The Globe editorial page argued that the deal was an improvement over the status quo.
As the months wore on, though, apprehension over the agreement grew in the state’s health care community. Competing health providers complained that the agreement would lock in Partners’ relatively higher prices as a permanent condition in the market. An organization of economists questioned the effectiveness of an antitrust remedy that would require constant monitoring of Partners’ conduct. A coming change in leadership at Partners — CEO Gary Gottlieb plans to depart this summer — and the election of a new attorney general underscored concerns that, over time, maintaining the terms of the deal would stop being a priority for either party to it.
In breaking with Coakley, her former boss, Healey changed the terms of the debate. Responding to Sanders’ request for her opinion, Healey said she would take legal action to block the South Shore transaction should the judge reject the agreement.
The judge was faced with two options: to either rubber-stamp a complicated agreement with wide repercussions for health care in Massachusetts, or to reject it based upon her own gut sense that the agreement wouldn’t adequately protect the public interest. Fortunately, Healey’s opinion moved the case back into more familiar legal territory — namely, antitrust law — and presents the court system with a rather more straightforward question: Would the South Shore acquisition give Partners too much power in the market, or not? An antitrust suit by Healey’s office may not succeed. But the very possibility of opposition from the state should prompt Partners to rethink its plans.