Tag: Partners HealthCare

Partners/Harvard Pilgrim merger madness: I’m quoted in the Boston Globe

May 9th, 2018 by
Beast of the East?

I just finished my post (Partners and Harvard Pilgrim aren’t really going to merge are they?) when I got a call from the Boston Globe asking about the same topic.

I’m quoted on the front page today (Experts puzzle over Partners-Harvard Pilgrim merger talks) and am happy to see I’m not the only one that is struggling to see the logic behind such a combination.

Here’s what I said:

“My guess is that regulators would not like this,” said David E. Williams, president of the Boston consulting firm Health Business Group. “There’s no compelling logic for a merger here. There would be a lot of resistance to it.”

Williams said he doesn’t see a good business reason for a merger since Partners and Harvard Pilgrim, one of the largest health insurers in Massachusetts, could choose to work together more closely while remaining independent.

I’m pretty sure the idea of a merger won’t get very far. Stay tuned.


By healthcare business consultant David E. Williams, president of Health Business Group.

 

Partners and Harvard Pilgrim aren’t really going to merge, are they?

May 7th, 2018 by

Friday’s news was full of stories about merger discussions between Partners HealthCare and Harvard Pilgrim Health Care. No one denied the reports, so we can assume there’s some truth to the rumors. But why would these organizations contemplate a merger and how likely is it to happen?

From Partners’ perspective:

  • After growing for decades by taking over other providers, Partners has run out of options for major acquisitions. The state blocked Partners’ attempt to buy South Shore Hospital, for example. Meanwhile, Partners’ biggest rival, Beth Israel is becoming more formidable as it combines with Lahey. In some ways a Partners/Harvard Pilgrim merger would be analogous to the proposed Aetna/CVS combination, which was pursued only after Aetna’s planned purchase of Humana was rejected on antitrust grounds.
  • After buying Neighborhood Health, Partners is comfortable with the idea of owning an insurer. But they want one that’s bigger and focused on the commercial market rather than Medicaid.
  • The shift to value based care means providers need more of the capabilities typically found within health plans. This becomes a buy v. build decision.

From Harvard Pilgrim’s perspective:

  • Even though it’s not the number one player in the market, it too may be too big to get away with acquiring a significant competitor, e.g., Tufts Health Plan.
  • The Partners account itself actually has about 100,000 members. Shifting that business away from Blue Cross could be significant even on its own. (Although it kind of reminds me of the Cheech and Chong sketch where Chong proclaims himself a “good customer” –of himself).
  • Possibly, Harvard Pilgrim could gain an exclusive relationship with Partners, where the only way to get care at Partners is by purchasing a Harvard Pilgrim plan. That doesn’t seem likely, but who knows?

Overall

It’s not unusual for health plans and providers to consider tying up. Remember, Harvard Pilgrim’s predecessor, Harvard Community Health Care was a staff model HMO with its own physicians and care facilities. More recently, you see combined payers and providers (“payviders”) emerging in the Medicare Advantage space. There is a certain appeal to combining health insurance and delivery in one entity–Kaiser is Exhibit A– but ultimately it’s not such a superior model.

I don’t think a merger of Harvard Pilgrim and Partners has a compelling rationale and I don’t see it happening. More likely is some kind of limited alliance or joint venture.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Are Massachusetts healthcare costs ok after all?

December 20th, 2016 by

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The best defense is a good offense. I assume that’s what Partners HealthCare CEO David Torchiana had in mind when he penned First do no harm in the Boston Globe. In a nutshell, he argues that healthcare costs in Massachusetts are more affordable for businesses and individuals than elsewhere in the country, that they are becoming relatively more affordable, and that the state should resist the urge to impose further cost controls.

I’ve made similar arguments about affordability myself. See for example, Massachusetts: Land of affordable health insurance from back in 2011.

And yet…

While Massachusetts has retained its affordability relative to other states, healthcare is taking up a higher and higher percentage of families’ incomes, including in Massachusetts. Medicaid and other healthcare spending dominates the state government’s spending growth, squeezes out discretionary initiatives for priorities such as education, and necessitates the tough budget cuts Governor Charlie Baker is making.

I’m sure I’m not the only one whose eyebrows were raised by Torchiana’s sanguine perspective.

Partners also should not claim too much credit for the reasonableness of healthcare spending in Massachusetts, considering that its own costs are among the highest. Despite receiving substantially higher reimbursement from commercial payers than other providers and enjoying a richer payer mix, Partners recently reported a record loss of $108 million for the year. Meanwhile, its smaller rivals –including those who treat a higher proportion of Medicaid patients and receive lower commercial reimbursement rates– are reporting better financial results.

If Partners had remained just Massachusetts General Hospital and the Brigham & Women’s Hospital I don’t think its executives and lobbyists would have to expend so much effort fending off the state. Massachusetts residents are justifiably proud of the worldwide reputations of these hospitals, which draw tremendous research dollars from the NIH and elsewhere, attract patients from around the world, and are equipped with the medical expertise and equipment to treat the most complex conditions.

No, the issue is that over the years Partners has dramatically expanded its footprint throughout the region, buying up or partnering with community hospitals and physician practices, and expanding its own overheads as it grapples with the balance between central and devolved management. Partners is now in the business of providing routine care throughout the region, and that helps drive up costs and puts the company in the spotlight. As the state grapples with bringing costs in line with benchmarks, Partners cannot expect to be given a free pass.

So there are a couple of alternatives: #1: Partners can bring its own costs closer in line with rivals or #2 it can divest its community assets and focus on being a great academic medical center. From what I can see, Partners is pursuing a light version of #1 while simultaneously slowing its plans to further expand in the community and mounting a charm and lobbying offensive with the state and the public.

By healthcare business consultant David E. Williams, president of Health Business Group.

Partners HealthCare goes global: Is it a good idea?

July 6th, 2015 by
There's gold in them thar hospitals
There’s gold in them thar hospitals

In shift, Partners HealthCare seeking growth globally in today’s Boston Globe describes how Partners is turning its focus from dominating the Massachusetts healthcare delivery system to looking for revenue growth overseas.

This wasn’t hard to predict, and it makes a good deal of sense. Last year the Globe asked me to speculate on whether Partners’ hiring of a new CEO would change the company’s strategic course. I said it was surprising that Partners had continued its relentless expansion in Massachusetts. While it made sense to affiliate with community hospitals and physician practices to generate complex referrals for “tertiary” care, it was puzzling why Partners wanted to be in the business of offering the most cost-effective colonoscopies and other routine services throughout the state, generating friction with the state government, health plans, employers and consumers as a byproduct.

I suggested that Partners might choose to return to its roots as a world-renowned academic medical center with its Massachusetts General and Brigham and Women’s hospitals. Interestingly, from today’s article it appears that MGH and the Brigham –not Partners itself– are the entities that are driving forward. MGH plans to manage a hospital in China near Macau while the Brigham has recruited a chief business development officer from Johns Hopkins to set up business in the usual hotspots for high-dollar international medical ventures, i.e., China and the Persian Gulf, with a nod toward emerging South American economies.

Using the MGH and Brigham brands is wise, and helps remind us of just what Partners is. Remember, Partners was established to prevent health plans and the state from playing MGH and the Brigham off of one another in contract negotiations. The two hospitals continue to exist –it is not a merger in the traditional sense.

But these entities will have to be careful when they go abroad prospecting for gold. A few things to watch out for:

  • Politics: Picking one foreign partner in a region can mean foregoing the opportunity to work with that entity’s rivals. And if an emir is ousted his successor may shoot down the pet projects of the previous emir and his family. (It has happened!)
  • Brand risk:  When I traveled to Asia a decade ago to research medical tourism, the Harvard name and crest were splashed up all over the place by operators who had little or nothing to do with Harvard. That had something to do with an earlier venture by Partners hospitals to use the Harvard name to drum up business overseas. It worked a little too well.
  • Overconfidence:  Sure we have great hospitals here in Boston. But not everyone running a hospital overseas is an idiot; many understand their own health system and patient populations pretty well. When I visited Singapore hospitals I was struck by the openness of executives in speaking with me, and impressed with their approach to cost-effective, high quality care. The one exception was when I visited a Hopkins outpost there, where the staff were highly bureaucratic and unapproachable.  MGH and the Brigham will need to make sure what they take on is aligned with their true areas of differentiation and not just their self-perceptions.
  • Ethical risk: Let’s be honest. American values differ from those of the Persian Gulf and China. As just one example, anyone in Boston can show up at the emergency department of MGH or the Brigham and be treated, regardless of nationality, race, religion or ability to pay. Will that be the case in hospitals MGH and the Brigham work with overseas? If not, is that ok? What else needs to be considered?

I wish the MGH and Brigham well in their overseas forays, and do think it’s a more fruitful approach than further expansion in Massachusetts. The Globe should have plenty more to write about as the strategies unfold.

Image courtesy of pakorn at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Is Partners HealthCare charting a new course? I'm quoted

October 29th, 2014 by

I’m quoted in today’s front page Boston Globe article (Partners HealthCare chief met a trail of resistance), which dissects the tenure of outgoing Partners CEO, Gary Gottlieb. It should be no surprise that the continued expansion of the biggest and strongest healthcare system in Massachusetts under Gottlieb has led to friction and controversy.

The reporter asked me about whether a new CEO would change the company’s strategy. Here’s what I said:

Partners executives have said bolstering their network of hospitals is critical to coordinating patient care and keeping costs in check through more efficient care. Gottlieb’s successor and Partners’ board will have to decide whether to stick with that approach.

“The broad expansion, it’s not obvious that they need to do that,” said David E. Williams, president of Health Business Group, a Boston consulting firm. “Partners doesn’t need to expand at all and it would still be the biggest and strongest in the state.”

I suggested that Partners could decide to go back to its roots as a world-renowned academic medical center with its Massachusetts General Hospital and Brigham and Women’s Hospital. There are other ways to coordinate care and control costs besides owning community hospitals and physician practices.

By healthcare business consultant David E. Williams of the Health Business Group