Partners CEO blames state's restriction on mergers for rising costs, stymied growth

Boston-based Partners HealthCare's chief executive spoke at length during a panel discussion Tuesday, saying state regulators' rejection of the health system's previous attempts to expand are partially to blame for high healthcare costs, according to a Common Wealth magazine report.

David Torchiana, MD, Partners' president and CEO, was joined on the Health Policy Commission's 2015 Cost Trends Hearing panel by Eric Schultz, president and CEO of Hartford, Conn.-based Harvard Pilgrim Health Care; Steven Strongwater, MD, CEO of Newton, Mass.-based Atrius Health; Kevin Tabb, MD, president and CEO of Boston-based Beth Israel Deaconess Medical Center and Ellen Zane, chair of Boston-based Wellforce.

Dr. Torchiana said Massachusetts Attorney General Maura Healey's decision to oppose a merger earlier this year with three suburban hospitals contributed to the health system's difficulties providing low-cost healthcare outside of Partners' facilities.

"In this environment with the mandate around cost trend and careful scrutiny all this is being utilized for, the goal of acquiring community assets is to use them to reposition care in a lower cost setting," Dr. Torchiana said to the committee, according to Boston Business Journal.

Attorney General Healey's rejection of Partners' acquisition of South Shore Hospital in Weymouth, Mass., and Hallmark Health System in Melrose, Mass., in January was driven by concern that these acquisitions by Partners — which currently holds nearly a quarter of the market — would stifle competition among healthcare providers.

Additionally, Attorney General Healey said Tuesday that physician networks owned by Partners and other large hospital systems often receive higher reimbursements from health plans, even though the quality of care they provide is comparable to other, smaller systems.

Dr. Torchiana responded by saying the high quality of care Partners offers is one of the main reasons patients choose to receive care at its facilities. While he acknowledged Partners does command a large share of the market, he said the health system's high reimbursements "[come] from the public perception of the quality of Partners," according to Common Wealth magazine.

Mr. Schultz disagreed. "Most consumers believe if the cost is higher, the quality is better, and that's not necessarily true," he said, according to Common Wealth magazine.

Other executives on the panel noted the need for increased ability to pursue acquisitions and expressed a desire for the state to allow them, saying they are actually a means of increasing competition. Although he opposed Partners' acquisitions, Dr. Tabb from BIDMC has held merger talks with other hospital systems, including Burlington, Mass.-based Lahey Health. He said expansion is needed to enable hospital systems to offer low-cost services at satellite facilities.

"Unless we have more strong, viable competition, we're going to be sitting here in 10 years asking why things haven't changed," Dr. Tabb said, according to Common Wealth magazine.

The five healthcare leaders on the panel cited unnecessary tests and poor regulation in addition to inadequate competition for the failure to contain costs.

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