United States: Health Insurers In Massachusetts Voice Opposition To Partners Healthcare Acquisition Of Rival Hospitals

In 2012, Partners Healthcare, the largest health system in Massachusetts, announced its intention to acquire two competing systems – South Shore and Hallmark. The proposed transactions were investigated by both the FTC and the Massachusetts Attorney General's Office, and in July of 2014, the Massachusetts AG's Office filed an action challenging the proposed transactions. However, on the same day, the Massachusetts AG's Office also filed a proposed Consent Judgment that would settle the matter pursuant to an agreement between the parties. While the settlement permitted Partners to consummate the deal, Partners would be required to accept a number of restrictions relating to the rates it could charge for its services for a number of years.

The proposed settlement required court approval, and in July Superior Court Judge Janet Sanders (Suffolk Superior Court), issued a scheduling order that provided an opportunity for potentially impacted parties to file comments about the proposed transaction. The Massachusetts AG's Office was required to respond, in writing, to these comments by September 25.

Not surprisingly, comments were filed on both sides of this issue. The Massachusetts Association of Health Plans (MAHP), a trade group comprised on 17 health insurers in the state, filed comments in opposition to the proposed settlement. While the MAHP did not ask that the transaction be barred, they expressed concern about the transaction potentially raising healthcare costs for consumers, and contended that the pricing restrictions agreed to by Partners might not be sufficient to control rising healthcare rates. The insurers also contended that restrictions on Partners' ability to require insurers to contract with all Partners' facilities were inadequate, and would limit the insurers' ability to create narrow networks that might reduce insurance costs for consumers. Notably, Blue Cross of Massachusetts, which is the largest commercial insurer in the state and not a member of MAHP, did not join in the MAHP comments and has not expressed any opposition to the proposed transaction.

On September 30, Judge Sanders issued an order that extended the comment period through October 25, and set a hearing in the matter for November 10. Judge Sanders is expected to decide the issue at that time. Stay tuned.

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