Partners, Harvard Pilgrim mull merger
Baker: Prove deal won’t harm customers
Medical behemoth Partners HealthCare and insurer Harvard Pilgrim Health Care have been in talks for months about a potential merger, but the health care giants could face an uphill battle if they strike a deal.
Gov. Charlie Baker, the former chief executive of Harvard Pilgrim, said any possible merger between the two should be treated with the same level of scrutiny as other recent hospital mergers.
“It’s going to be incumbent on them to make the case for why this is a good idea,” Baker said yesterday. “The details around something like that matter a lot.”
Partners said it is “exploring new partnerships” with organizations including Harvard Pilgrim. “As the health care environment changes and insurers and
providers increasingly share financial risk, traditional relationships are shifting,” said Partners representative Rich Copp. “Partners HealthCare is constantly exploring new partnerships and relationships with other providers and insurers with the goal of improving the delivery of health care to patients both locally and around the world. Harvard Pilgrim is certainly among those organizations.”
Harvard Pilgrim confirmed the recent conversations, calling them “exploratory” and “very preliminary.”
“As two leading and innovative health care companies, Partners and Harvard Pilgrim have been engaged in exploratory conversations regarding whether each of our strong organizations could be even more successful working together,” the statement said. “We are assessing a number of potential models for how this could best work. This could involve a range of options from new contractual arrangements to deeper clinical, operational and financial integration of our organizations.”
Partners owns Brigham and Women’s Hospital and Massachusetts General Hospital, and is known to be the largest health care provider in Massachusetts. Wellesley-based Harvard Pilgrim has about 1.2 million members.
News of the closed-door talks comes as Beth Israel Deaconess Medical Center and Lahey Health face criticism from health care advocates for a proposed merger, which critics say would drive up health care costs and leave poor residents without access to services.
Partners already is known for providing some of the most costly services in the state.
Baker said he was unaware of the discussions before yesterday. He said the companies will have to show the deal will not harm patients and customers.
“There are three really big questions. The first one is what’s the strategic rationale behind it and is it legitimate and justified,” he said. “The second is what’s it going to do to people’s ability to access health care here in the commonwealth and the third question is what’s it going to do with respect to the cost of health care.”
Julie Pinkham, executive director of the Massachusetts Nurses Association, said the organization would be “carefully watching.”
“There are two potential paths: to take over things and close down the competitor or to create an alliance. In this particular instance, it’s not clear what the end game is,” she said.
Getting the merger approved could be a heavy lift. At the federal level, horizontal acquisitions have not been favored, said Kristina Minnick, professor of finance at Bentley University.
“I think it’s going to be really difficult for the deal to go through,” Minnick said. “Unless they’re able to show that they can offer better service at a lower price — which will be difficult — I doubt at the state level Massachusetts and the attorney general will let it pass.”
Even if it were to get the OK, the process itself is lengthy, and would first require review by the Health Policy Commission.
“We have not yet received formal notice regarding a proposed new relationship between Partners HealthCare and Harvard Pilgrim Health Care,” said Matthew Kitsos, spokesman for the Health Policy Commission. “We look forward to learning more as negotiations progress.”