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July 3, 2014

Report: Partners merger with Hallmark would increase costs

BOSTON — Partners HealthCare’s proposed merger with Hallmark Health System in the Bay State’s North Shore area would reinforce Partners’ dominance and increase medical spending in northeastern Massachusetts, according to a preliminary report issued yesterday by an independent state agency charged with monitoring the health care market.

The Health Policy Commission, which reviews transactions anticipated to have significant impacts on health care costs, released findings saying medical spending in the region will increase by an estimated $15.5 million to $23 million per year for three major commercial payers.

A Superior Court judge is weighing a settlement between Partners and Attorney General Martha Coakley that allows Partners to acquire South Shore Hospital and Hallmark.

The commission voted to send its preliminary report to Coakley, so that she can provide it to Judge Janet Sanders, who is accepting comments until July 21 on the proposed acquisitions and restrictions placed on Partners in the proposed settlement.

The Coakley-Partners agreement, the result of a five-year investigation, attempts to constrain Partners’ network growth, contracting efforts and prices for five to 10 years.

Earlier this year, before Coakley and Partners reached the agreement, the commission issued a similar report on the South Shore Hospital side of the proposal, saying an acquisition of the Weymouth hospital would lead to increased health spending, reduced competition and premium increases.

The commission’s preliminary findings on the proposed merger with Hallmark stated it offers the potential for improvements in quality care and expanded access to services, but since both Partners and Hallmark are already contractually and clinically aligned, it is “unclear” how corporate ownership, through a merger, is crucial to improving quality in ways the current affiliation is not.

The commission’s preliminary report said the scope of savings resulting from the merger is likely to be smaller than what Partners and Hallmark projected: $5.4 million annually instead of $10.9 million a year.

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