Central Mass. hospitals keep an eye on Partners

Edward J. Kelly, president of Milford Regional Medical Center, says geography works in the hospital's favor.

Write a Comment

By Livia Gershon Special To The Worcester Business Jorunal

Edward Moore, president and CEO of the Harrington HealthCare System, has been keeping a close eye on developments with Partners HealthCare, the enormous and fast-growing eastern Massachusetts health care system. And, while Partners recently scaled back its latest expansion effort, dropping plans to acquire South Shore Hospital under pressure from state Attorney General Maura Healey, Moore is not letting down his guard.

“We don't have our head in the sand, thinking that consolidations won't continue to happen,” he said.

Moore said Harrington is determined to stay an “independent, nonprofit, community health care system.” Every word in that description is important, he said, and the number of hospital systems that can be defined that way is declining. Some have merged with, or been acquired by, other systems and others have gone bankrupt.

Harrington and other remaining independent hospital systems in Central Massachusetts are facing the consolidating market head-on. They've found ways to work together with each other, and with the larger systems around them, to stay competitive.

Partners' expansion efforts, and the way they've been partially thwarted, show just how fraught the issue of consolidation can be. The system was created in 1994 through the merger of Brigham and Women's and Massachusetts General hospitals. Since then, it's acquired other hospitals around eastern Massachusetts and become the largest private employer in the state with 60,000 workers.

Brigham and Women's and MGH also charge some of the highest rates in the state for medical procedures, and gaining more market share could allow them to raise prices even more. Last year, then-Attorney General Martha Coakley reached a deal with Partners to allow the system to acquire South Shore, as well as two hospitals operated by Hallmark Health. The plan included some restrictions on price hikes and further expansion, but some observers warned that might not be enough. Some projected that the consolidation might lead to higher prices and hospital closings. When Healey took over from Coakley in January, she essentially nixed the deal. Partners has now dropped the idea of taking over South Shore, though it may continue with the Hallmark acquisition.

Affiliations with bigger players

Partners doesn't directly compete against any Central Massachusetts hospitals, but independent medical centers here have been working to make sure patients have access to the sort of specialized services that larger systems provide. Harrington partners with another big Boston hospital, Beth Israel Deaconess Medical Center, to read its radiology images. It also works closely with Central Massachusetts' own big health care system, UMass Memorial Health Care. UMass specialists can monitor Harrington patients remotely through the system's eICU, and UMass oncologists serve Harrington's cancer center.

Aside from forming partnerships with larger systems, Harrington also works with Heywood Healthcare, which runs hospitals in Gardner and Athol, collaborating on some information systems to keep costs down.

“We look at those as win-wins so we can continue to stay independent and support the local community,” Moore said.

At one of the only other remaining independent hospitals in the region, Milford Regional Medical Center, President Edward J. Kelly said it's been relatively easy to resist absorption by a bigger system because its coverage area straddles the line between eastern and central Massachusetts.

“It would be hard for us to be solely with one system because of our geography,” he said.

Like Harrington, Milford works with some of the big guys, including UMass and Boston Children's Hospital. It also runs a cancer center in partnership with Dana-Farber and Brigham Women's.

Impact on the books

Beyond operational considerations, hospital consolidation affects the financial side of health systems as well. One of the arguments against Partners' expansion is that larger systems have more leverage to pressure insurers and government payers such as Medicare to accept high prices. Moore said it's true that small systems such as Harrington have more trouble in fee negotiations.

“Are we paid adequately for what we do? No. We would like to be paid better,” he said. “But I would be the first to tell you, it's a complicated issue.”

Teaching hospitals with specialized services have bigger expenses, and the costs tend to be spread out over all the services they provide, driving fees up. UMass Memorial Medical Center in Worcester is the most technically advanced, and the most expensive, hospital in Central Massachusetts, and President Patrick Muldoon said the cost of care is definitely an issue. He said the UMass system tries to encourage patients to seek care for most of their needs at their local community hospitals.

In any case, hospital leaders expect the question of what fee payers will provide for any given appointment or operation to become less relevant over the coming years. Insurers and government agencies are beginning to switch to global payment systems, in which a health care system gets a set payment to provide all the care a patient needs rather than get paid for each service.

Muldoon said UMass got certified under Medicare's version of this sort of system in January, and about 10 percent of commercially insured patients already have a similar plan.

“That pendulum is slowly swinging,” he said. “Our mission here at the medical center and UMass Memorial Health Care is to serve this population of Central Massachusetts. I think if we do that well everything else will take care of itself.”