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August 15, 2011

Partners Health Care acquiring Neighborhood Health Plan: The 800-Pound Gorilla and the Fig Leaf?

Kingkong.jpg (480×320) Partners Health Care (the dominant provider network in Greater Boston) and Neighborhood Health Plan (a local mostly-Medicaid HMO) just announced that the former intends to acquire the latter, and maintain it as a separate operating entity.  No money will change hands between the parties, but an unspecified amount of money will be given by Partners as grants to community health centers where NHP members receive much of their health care services. Gary Gottlieb, CEO of Partners, graciously allowed that it would not seek to interfere with the current referral patterns of NHP members to the two local safety-net hospitals (which get disproportionate share hospital payments; Partners hospitals do not).

The deal is contingent on several layers of regulatory review, including review by the Commonwealth's Attorney General's Office, which has reported on Partners using its market power to extract high rates of reimbursement from payors that do not correlate to a higher quality of care relative to others around town.

See the NHP presser and fact sheet, and the Boston Globe story on the deal announcement.

So, is the motivation for the affiliation (a) Partners offering a helping hand to a Medicaid HMO and a network of community health centers as part of its mission, (b) a rational reaction to market forces in the face of health reform by Partners, providing a fig leaf for Partners as it faces further scrutiny in the marketplace by regulators and others, (c) an ace in the hole that may be used to win a future hand (e.g., when state, Federal or commercial reimbursement rates get cut further, and Partners can claim it's a special case) or is it (d) simply part of the Partners unified field theory of the marketplace whereby it seeks to extend its influence over payors and non-Partners providers and position itself for future success as an ACO or other as-yet-undefined new type of provider network with a payor kicker?   Probably a bit of each.  The community health center move is just the latest in a years-long chess game of CHC affiliations.  The HMO acquisition is something new, though, and will bear watching.

For more on Partners, the Massachusetts experiment and Massachusetts Attorney General Martha Coakley, see this post on global payments and earlier Massachusetts Attorney General and special commission reports and other resources linked to from the post.

This news comes on the heels of news of some fancy footwork by John Kerry that tied all Massachusetts hospital Medicare payments to a wage index related to Nantucket Cottage Hospital (a high-wage hospital on an island) which is part of Partners.  (A few other states benefited from this ACA amendment as well.)  This being a zero-sum game, the $275 million a year extra income flowing to Bay State hospitals comes out of the hides of other states' hospitals. They are less than thrilled.

The continuing question as all of this shakes out is -- or perhaps should be -- whether the Partners-NHP deal advances Don Berwick's triple aim: improving the experience of care, improving the health of populations, and reducing per capita costs of health care.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting


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