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Partners, Harvard Pilgrim Suspend Healthcare Merger Talks

Concerns that a healthcare merger between Boston’s largest hospital system and Harvard Pilgrim would not be possible halted the deal.

Healthcare merger

Source: Thinkstock

By Jacqueline LaPointe

- Partners HealthCare, the largest hospital system in Massachusetts, recently halted healthcare merger talks with local insurer Harvard Pilgrim Health Care over concerns the deal would not earn regulatory approval.

“Now isn’t the right time to try to push something like that ahead,” Partners President and CEO, David Torchiana, MD, recently told The Boston Globe. “I don’t think either organization is sure that it’s something that’s actually possible to achieve…in this environment right now where there’s such intense scrutiny of every move.”

Healthcare merger talks between Partners and Harvard Pilgrim may be off for now. But the insurer reassured stakeholders that the suspended talks do not signal the end of the partnership between Partners and Harvard Pilgrim.

“Our discussions with Partners HealthCare have always been focused on exploring ways we can improve and enhance the patient experience while helping to control costs,” Harvard Pilgrim’s President and CEO, Michael Carson said in an emailed statement. “We continue to evaluate opportunities for collaboration with Partners on this important mission.”

Partners and Harvard Pilgrim announced their healthcare merger talks in May 2018. The healthcare organizations anticipated the deal to reduce healthcare costs and improve patient outcomes.

“As the healthcare environment changes and insurers and providers increasingly share financial risk, traditional relationships are shifting,” Partners spokesperson Rich Copp told RevCycleIntelligence.com in an email. “Partners HealthCare is constantly exploring new partnerships and relationships with other providers and insurers with the goal of improving the delivery of healthcare to patients both locally and around the world. Harvard Pilgrim is certainly among those organizations.”

The healthcare organizations, however, were unsure how the partnership between the large hospital system and payer would pan out.

“We are assessing a number of potential models for how this could best work,” Harvard Pilgrim spokesperson Joan Fallon said. “This could involve a range of options from new contractual arrangements to deeper clinical, operational, and financial integration of our organizations.”

But according to reports from WBUR, which first reported the halted healthcare merger talks between Partners and Harvard Pilgrim, the complexity of managing the care and costs of both physicians and insurers together complicated the deal.

Partners proposed expansion with Care New England in Rhode Island may have also been a factor in hitting pause on the healthcare merger talks. The health systems inked a definitive hospital merger agreement in February 2018.

Partners is already a major player in the Massachusetts healthcare market, operating 15 hospitals including Brigham and Women’s Hospital and Massachusetts General Hospital. The non-profit hospital system’s portfolio also includes its own insurance company, Neighborhood Health Plan, which recently rebranded to AllWays Health Partners.

The Massachusetts hospital system is also quickly expanding its footprint in New England. The system recently acquired specialty hospital Massachusetts Eye and Ear.

The hospital system brings in over $7.2 billion in net patient revenue, placing it in the 97th percentile, according to data from Definitive Healthcare.

As the largest hospital system in the Massachusetts, Partners is already under intense scrutiny by state officials. And a possible healthcare merger with Harvard Pilgrim might not survive the regulatory process, the health system’s CEO explained.

Massachusetts Governor Charlie Baker already commented in May 2018 that the healthcare merger deal would go through the same level of scrutiny as other recent hospital mergers. Federal and state officials have been cracking down on healthcare merger deals to squash anticompetitive behaviors and rising healthcare costs.

“It’s going to be incumbent on them to make the case for why this is a good idea,” Baker told the Boston Herald. “The details around something like that matter a lot.”

Partners may be looking to acquire and develop strategic partnerships with local healthcare organizations to remain competitive in the face of a proposed hospital merger between Boston-based Beth Israel Deaconess health system and Lahey Health.

The health systems signed a healthcare merger agreement in July 2017 to create the second largest hospital system in the state.

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