Saturday, October 11, 2014

A No Brainer?

In earlier postings I have discussed the proposal of Partners HealthCare to acquire some additional hospitals in the Boston area.  That transaction requires the approval of Martha Coakley, Massachusetts Attorney General and Democratic candidate for Governor.  General Coakley has negotiated an agreement with Partners under which she is willing to grant approval.  However, the deal must also be blessed by Superior Court Judge Janet I Sanders.  According to a Joan Vennochi column in the October 5 issue of the Boston Sunday Globe, Judge Sanders has reservations, based in part on the objections that have been filed by a number of parties.

And well she might.

Partners was formed by a merger of the health care giants Massachusetts General Hospital and Brigham and Women’s Hospital.  It is next to impossible to sell a health insurance policy in eastern Massachusetts that does not cover services provided by one of them and the merger made it impossible for insurance companies to play off one against the other in rate negotiations.  Partners took advantage of the resulting strength and forced insurance companies to pay them at substantially higher levels than are paid to other hospitals.

The agreement negotiated by General Coakley purports to deal with this issue by putting caps on future price increases.  But few knowledgeable people believe that a powerhouse like Partners would not be able to find ways around that.

Another point is that if the proposed acquisition did not create inordinate economic power to raise rates, no such agreement would be necessary.  That poses a contradiction.  The agreement, if approved, would permit a concentration of economic power that the requirement for approval was intended to prevent.

Sounds like a no-brainer to me.


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