Boston competition comes to Central Mass. with Steward expansion

A nurse at Nashoba Valley Medical Center works with a patient.

Dr. Eric Dickson, president & CEO, UMass Memorial Health Care

Lynn Nicholas, president & CEO, Massachusetts Health & Hospital Association

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By Emily Micucci

Since buying the troubled Caritas Christi Health Care system in 2010, Boston-based Steward Health Care has systematically shored up the multi-hospital system, growing from six to 10 hospitals through acquisitions.

Until now, the growth has been largely concentrated in Eastern Massachusetts, but Steward's latest venture – the planned acquisition of the Central Massachusetts Independent Physicians Association (CMIPA) – would bring a major new healthcare player into a region that Boston-area providers have mostly stayed out of.

According to a notice filed with the Massachusetts Health Policy Commission, Steward has agreed to acquire CMIPA's assets in a deal that would bring CMIPA under the Steward umbrella for the purposes of forming an accountable care organization that brings patients treated by CMIPA doctors under Steward's contracts with payers. CMIPA doctors would not be employed by Steward, but would be part of Steward Health Care Network, the second largest physician network in the state. The Health Policy Commission is conducting a preliminary review of the agreement, to gauge whether it will impact the cost, access and quality of health care.

Tip of the iceberg

“It's their way of growing their network,” said Lynn Nicholas, president and CEO of the Massachusetts Health and Hospital Association. While Steward isn't a member, Nicholas said it and other providers are widening their nets in order to grow because of cost pressures the healthcare industry is facing.

“You're only seeing the tip of the iceberg,” Nicholas said, of looming changes in the provider landscape.

Steward's own growth may also just be gaining traction. The company, backed by private equity firm Cerberus Capital Management, announced in September it received $1.25 billion from an Alabama-based real estatement investment trust to fund a national expansion plan, which may include new hospital acquisitions. This followed Steward's first-ever operating profit in July, at $131 million.

“This ensures Steward will continue to provide high quality health care at an affordable cost in New England, and enables us to grow our proven quality model nationally,” Steward President and CEO Ralph de la Torre said in a statement announcing the funding.

The CMIPA predicament

CMIPA officials have spoken in recent years of their need to invest in new infrastructure in order to keep members afloat. Specifically, the cost of electronic health records (EHR) systems has been problematic for the roughly 200-member organization, which provides insurance contracting, case management and other support services for its doctors. Such EHR systems carry price tags better suited to larger organizations.

The CMIPA also doesn't have enough members to participate in viable risk-based contracts, in which insurers give providers financial incentives for managing patients' health well, and on budget. The healthcare system, both in Massachusetts and nationally, is transitioning to this accountable care organization (ACO) model, but providers need large numbers of patients in order to ink such contracts.

Steward may have seemed like a prime partner for the CMIPA, because it has emphasized delivering health care under the ACO model. In a statement announcing the CMIPA acquisition, Steward said partnering with the doctors group will facilitate the entry of more patients into the kind of accountable care model being encouraged by state and federal healthcare officials, while also increasing competition in a region that is served by few providers.

Steward's strategy has been to deliver health care at a relatively low cost, and it has apparently achieved this goal. A December 2015 report from Attorney General Maura Healey called the system a low-to-moderately priced healthcare system compared to other providers.

According to Steward, the acquisition will benefit consumers because CMIPA physicians will accept a broader set of insurance plans. Steward noted CMIPA referral relationships with Central Massachusetts acute care facilities would not be affected.

“Patients in Central Massachusetts deserve to benefit from the new focus on coordinated care. Connecting CMIPA to the Steward Health Care Network will align these exceptional physicians with our leading accountable care model,” Dr. Mark Girard, president of Steward Health Care Network, said.

Officials at CMIPA did not return phone calls seeking comment.

UMass Memorial CEO puzzles over deal

Steward isn't the only provider that's delved into accountable care. Closer to home, UMass Memorial Health Care in Worcester has launched ACO pilot programs funded by the Centers for Medicaid and Medicare Services (CMS) and is planning to lead the charge on MassHealth's inaugural ACO pilot in the region. The system is in talks with smaller providers in Central Massachusetts about partnering with them on that venture.

Dr. Eric Dickson, president and CEO of UMass Memorial Health Care, said the system had discussed a similar alignment with CMIPA early in his three-year tenure with UMass Memorial, but discussions were not fruitful. Dickson was bemused at the pending deal with Steward, saying that CMIPA had not reached out to UMass Memorial recently.

“The surprise for us is the partner that they chose. Steward has a good reputation for their physician network, (but) there's no Steward hospitals in the region for them to refer patients to,” Dickson said.

While Steward is adamant that CMIPA patients will continue to refer patients to Central Massachusetts hospitals, Dickson said it's important that the system follows through.

If patients are redirected to Steward's anchor hospital, Saint Elizabeth's Medical Center in Boston, for example, Dickson said patients would suffer.

More for-profit care in Central Mass.?

Dickson recognized Steward has been able to deliver quality healthcare at a relatively low cost through its accountable care strategy.

He said it's important to remember that Steward is a for-profit organization. Most Central Massachusetts providers are nonprofit organizations, with the exception of Tenet Health Care-owned Saint Vincent Hospital in Worcester and MetroWest Medical Center in Framingham and Natick.

In fact, Saint Vincent has an important connection with CMIPA. Doctors within Saint Vincent's physician group, Saint Vincent Medical Group, make up a large portion of the members of CMIPA. This, according to Dickson, forms an important link between two for-profit health care systems in Central Massachusetts, where Steward would provide contracting for Saint Vincent doctors.

Erica Noonan, spokeswoman for Dallas-based Tenet Health Care's Northeast region, said CMIPA is the payer contracting vehicle for Saint Vincent Medical Group. She declined to comment on Steward's plans to acquire the CMIPA, saying Tenet has no position on the deal.

Steward declined to comment specifically on the possibility that it will further align with Tenet in the future, but left the door open to more partnerships in Central Massachusetts.

“Steward is always open to considering new partnerships that help ensure employers and patients have access to high-quality, affordable health care options close to home,” Steward spokesman Jeff Hall said in an email.