For Immediate Release - September 25, 2014

Partners Agrees to Price Cap for Hallmark Health as Part of Amended Settlement

AG’s Office Files Public Comments and Response to the Court

BOSTON – After additional negotiations, Partners HealthCare has agreed to cap prices at Hallmark Health Centers for six and a half years if it is permitted to acquire Hallmark under the proposed Consent Judgment, Attorney General Martha Coakley announced today.

The AG’s Office pushed for the additional protections related to Hallmark following the Health Policy Commission’s (HPC) report on Sept. 3. The parties have jointly proposed to amend the consent judgment reached as part of the Attorney General’s anti-trust investigation into Partners’ acquisition of South Shore and Hallmark hospitals. In addition to the price restriction, Partners also agreed to maintain the current level of psychiatric and behavioral health services at its Hallmark and North Shore facilities. 

“These additional concessions will mitigate the potential for higher prices related to this transaction and ensure that mental health treatment remains fully accessible to the surrounding community,” said AG Coakley.

The AG’s office had always maintained the right to renegotiate the Hallmark portion of the consent judgment to take into account any recommendations from the HPC. The AG’s Office immediately began negotiating new restrictions to address specific issues raised by the HPC in its Hallmark report. As a result of those negotiations, the proposed amended consent judgment provides:

  • A cap on Hallmark prices for six and a half years, limiting any increase to the lower of general inflation or medical inflation;
  • That Partners preserve the current overall level of psychiatric and behavioral health services at its Hallmark and North Shore facilities for five years;
  • That in implementing its new information technology system, Partners must develop procedures to address potential issues concerning out-of-network patient referrals when component contracting is implemented; and
  • The compliance monitor will review and report on the prevalence of Partners’ “commercial risk” business which is subject to a Total Medical Expenses (TME) restriction under the settlement.

Filed in Suffolk Superior Court today, the amended consent judgment is expected to be considered by Judge Janet Sanders. The next court date is Monday, Sept. 29. If approved by the court, the consent judgment will also resolve an antitrust investigation by the Attorney General’s Office into Partners and its acquisition of South Shore Hospital.

In addition to the amended consent judgment, the AG’s Office also filed its formal response to the more than 100 comments received as part of the public comment period ordered by the court. In that response, the AG’s Office acknowledges the wide range of opinions among patients, doctors, advocates, residents and political leaders about the merits of the consent judgment.

The consent judgment, first announced in June, is the result of extensive investigations into Partners’ market conduct and proposed acquisitions. The Office of the Attorney General issued its first civil investigative demands (CID) regarding Partners’ conduct and affiliation practices in 2009. Following Partners’ announcement of its proposed acquisitions of South Shore in 2012, and of Hallmark in 2013, the AG issued additional CIDs to evaluate the likely competitive impact of those proposed acquisitions. In February, the HPC released a report concluding that Partners’ acquisition of South Shore would result in increased costs and referred the report to the AG’s Office for further investigation.

As part of these investigations, attorneys and staff of the AG’s Office and their experts have reviewed hundreds of thousands of documents, compiled and reviewed economic projections, interviewed witnesses, and conducted depositions of relevant market participants. The Attorney General also coordinated her investigation with that of the Antitrust Division of the Department of Justice. Staff and experts of each office often worked together to examine the potential competitive effects of the various transactions and practices at issue. 

The new provisions included in the modified consent judgment add to the remedies set forth in the proposed consent judgment. They include provisions that will fundamentally alter the way Partners contracts with health insurers for up to 10 years, eliminating Partners’ ability to demand “all or nothing” network contracting; preventing Partners from contracting with affiliate physician groups that are not part of its hospitals for 10 years; capping the rate at which Partners may raise its prices at the lower of the rate of general inflation or medical inflation across its entire network through 2020; capping its physician growth for five years; and blocking further hospital expansion in eastern Massachusetts, including Worcester County, for the next seven years.

A monitor, selected by the AG’s Office and paid for by Partners, will ensure that Partners complies with these remedies set forth in the consent judgment for the duration of the agreement. If Partners violates the terms of the consent judgment, the organization could be held in contempt of court and face penalties.

Chief of the AG’s Antitrust Division Will Matlack, Assistant Attorneys General Matthew Lyons, Michael Franck, Michael MacKenzie, Paralegal/Economic Analysis Daniel Van Lunen, Assistant Attorney General and Chief of the AG’s Public Protection and Advocacy Bureau Mary Freeley, and First Assistant Attorney General Chris Barry-Smith worked on this case.