HPC Issues Final Cost and Market Impact Review Report for Partners HealthCare, Massachusetts Eye and Ear Transaction
Report Referred to Other State Agencies for Further Consideration
BOSTON – Wednesday, January 3, 2018 – Today, the Massachusetts Health Policy Commission (HPC) released the final report on its cost and market impact review (CMIR) of Partners HealthCare System’s (Partners) planned acquisition of Massachusetts Eye and Ear (MEE), which includes the Massachusetts Eye and Ear Infirmary (MEEI) – the state’s only eye, ear, nose, and throat specialty hospital– and its physician organization, Massachusetts Eye and Ear Associates (MEEA).
On November 1, 2017, the HPC released a preliminary report on the transaction and the parties provided a response to the preliminary report on November 30, 2017. The final report includes, as an attachment, the parties’ response and the HPC’s analysis of the response.
“The final report raises a number of concerns for public consideration about this transaction’s anticipated impact on health care costs – up to $61 million annually in added commercial spending from hospital and physician rate increases,” said Dr. Stuart H. Altman, Chair, Massachusetts Health Policy Commission. “The parties anticipate certain operating savings, but they concede that they expect some rate increases as a result of the transaction, declining to offer any commitment to limit such increases. These increases will impact consumers and businesses in the Commonwealth who will likely see higher premiums as a result. Additionally, these higher prices may impact tiered and limited network products, either by undermining the savings those products offer or by reducing access to Massachusetts Eye and Ear’s high-quality specialty care for members of those plans.”
Key findings from the final CMIR report:
- Cost and Market Impact: Over time, the HPC estimates that total commercial health care spending would increase by $20.8 million to $61.2 million annually if Partners achieves parity between MEEI’s rates and the rates of Partners’ other acute care hospitals, depending on price levels obtained, and if MEEA physicians begin receiving Partners physician rates for all commercial payers. The parties declined to offer an unequivocal and measurable commitment to limit such increases, even though the parties expect to achieve internal efficiencies that would reduce their own expenses.
- Quality Impact: The parties have stated that the proposed transaction will facilitate improved quality, primarily by better integrating MEE into Partners’ technical infrastructure. However, it is unclear that the proposed transaction is necessary or sufficient to achieve improvements in clinical quality, and the parties propose to collect baseline data and set quality improvement targets only after the transaction is completed.
- Access Impact: The parties have suggested that patient need for MEE’s services is increasing, but have not described specific plans for when or where MEE might expand its services to meet those needs, or why corporate integration would be necessary to do so. If MEE adopts Partners’ contracting patterns, patients in tiered and limited network products may face barriers to accessing MEE’s specialty services, although the parties have stated a commitment to continue MEE’s participation in MassHealth Managed Care Organization networks.
The final report meets the statutory criteria for mandatory referral to the Massachusetts Attorney General’s Office as Partners has a “dominant market share,” “materially higher prices” than other providers, and “materially higher TME” than other providers. Additionally, the report will be provided to the Department of Public Health’s Determination of Need program, which is also currently evaluating the transaction. The final report will help inform other government agencies as they assess whether the potential benefits of this transaction are significant and concrete enough to outweigh the substantial spending impacts.
The Massachusetts Health Policy Commission (HPC) is an independent state agency that develops policy to reduce health care cost growth and improve the quality of patient care. The HPC's mission is to advance a more transparent, accountable, and innovative health care system through its independent policy leadership and investment programs. The HPC’s goal is better health and better care – at a lower cost – across the Commonwealth.