CEO: Emerson 'thrilled' that door is open on Partners merger
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Emerson Hospital CEO Christine Schuster said the board of directors will examine its options over the next year, after Partners HealthCare announced a deal with Atty. Gen. Martha Coakley last week, giving Partners and Emerson the option to merge.
Though a merger with Boston-based Partners HealthCare is not imminent, Emerson Hospital CEO Christine Schuster said hospital officials are “thrilled” Partners has the option to acquire Emerson under a deal between the Boston-based health care system and Atty. Gen. Martha Coakley.
The deal is the result of a three-year investigation Partners was subjected to as it attempted to acquire South Shore Hospital in Weymouth and its physician group, Harbor Medical Associates, and Hallmark HealthCare’s hospitals in Melrose and Wakefield.
7-year provision makes exception for Emerson
Coakley initiated an anti-competition investigation out of fear that Partners, the Bay State’s largest health care system, would effectively monopolize the hospital industry by acquiring three more hospitals. That would reduce competition and possibly lead to price increases.
The agreement contains a number of remedies designed to minimize the risk that Partners will drive up costs in the Massachusetts health care market in acquiring the three hospitals – including a provision that bars Partners from acquiring any more hospitals in Eastern Massachusetts and Worcester County for seven years. But Emerson is the lone exception.
Emerson is closely affiliated with Partners already, but remains independent. In addition to a number of clinical affiliations with Partners’ Boston hospitals, Emerson is also part of the system’s management services organization, Partners Community Healthcare, Inc., which negotiates insurance contracts for its members.
Whether Emerson and Partners will solidify their relationship with a merger remains to be seen. Schuster, in an interview last week, said hospital officials will begin the process of determining next steps, following news of the agreement between Partners and Coakley, estimating it will take about a year to come up with a plan.
Schuster: Decision 'provides us with options'
“We are thrilled with the attorney general’s ruling,” Schuster said. “I think what it does for us, is it provides us with options that may have not existed if the ruling had gone the other way.”
Asked whether the community the hospital serves, including 25 towns, is in favor of a potential merger with Partners, Schuster declined to speculate. But she said linking up with a larger system is advantageous in a health care environment that’s placing new cost pressures on smaller community hospitals.
A recent report by the state’s Center for Health Information and Analysis is a clear indication that hospital budgets are getting tighter as state and federal health care reform is driving down reimbursements and patient admissions at hospitals across the state. Emerson, with 179 beds, saw its operating profit decline to $1.13 million in fiscal 2013, which ended Sept. 30. That’s down from $4.47 million a year earlier.
“I think if you just step back and see the direction that health care is going … I do believe it’s going to be more difficult for hospitals to go it alone,” Schuster said.
Partners spokesman Rich Copp said last week the system has no information to share about a potential merger with Emerson. But if the system decides to pursue one, it will be subject to the same type of scrutiny that preceded Partners’ deal with Coakley, including a review by the state Health Policy Commission (HPC), according to an official there.
The Health Policy Commission raised a number of concerns regarding cost increases when it reviewed Partners’ plans to acquire the three other hospitals, but Dr. Stuart H. Altman, chairman of the commission, said in a statement he’s pleased with the settlement between Coakley and Partners.
“I look forward to reviewing a final agreement, but I believe the attorney general and the parties have taken our work into account in developing the conditions under which this transaction can move forward. The HPC will continue to assess the impact of provider market changes and work with the attorney general to foster a more competitive health system for the benefit of Massachusetts consumers and businesses,” Altman said.
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