For Immediate Release - May 22, 2013

Health Policy Commission Initiates First Cost & Market Impact Review

Partners, South Shore Hospital merger to be examined for potential effects on costs and the health care market

BOSTON – Wednesday, May 22, 2013 – The Health Policy Commission (HPC) today initiated its first Cost and Market Impact Review (CMIR) by notifying Partners Healthcare System and South Shore Hospital that it will examine the potential effects of their proposed merger on costs and the health care market.

“CMIRs are an important tool to enhance the transparency of significant changes to our health care system,” said HPC Executive Director David Seltz. “Almost every day we hear about new developments in our health care market. These reviews help us consider the impact of those developments on health care costs and market functioning. We are committed to conducting them on consumers’ behalf in a timely and thorough manner.”

The HPC’s preliminary review of this proposed transaction found that given Partners’ size and high costs, an expansion of that system to include South Shore Hospital, a large, high-cost community hospital, is likely to have a significant impact on the Commonwealth’s ability to meet its health care cost growth goals, and on the competitive market. To enhance public understanding of the potential costs and benefits of this transaction, the HPC is proceeding with a further examination.

“The HPC was set up to be a watchdog to monitor the health care market,” said HPC Chair Dr. Stuart Altman. “CMIRs are one of the ways we will fulfill that important role as we work to build a more affordable, effective, accountable, and transparent system. I look forward to discussing the merits and next steps for this specific review with the commissioners and the public at our June meeting.”  

Seltz will report on the CMIR at the Commission’s next public meeting, Wednesday, June 19, 2013, and Commissioners will vote whether to continue with the review. The CMIR will include analyzing information from the parties and other market participants, developing a preliminary report, and issuing a final report. The proposed transaction cannot be completed until 30 days after the HPC issues its final report. The HPC may also refer its findings to the Attorney General for possible further action on behalf of health care consumers.

Chapter 224 of the Acts of 2012, the Commonwealth’s nation-leading health care cost containment law, requires providers to notify the HPC before making material changes to their operations or governance structure. Following a 30-day initial review of that notice, the HPC can proceed to a CMIR if the proposed change is likely to result in a significant impact on the Commonwealth’s ability to meet its health care cost growth benchmark, or on the competitive market. For 2013 and 2014, the law’s benchmark limits annual growth in total health care expenditures to 3.6%, in line with the state’s long-term projected economic productivity.

More information on the CMIR process, including examples of cost, market, and public interest factors that the HPC may examine, can be found here pdf format of Material Change Notice Review Process
. All material change notices filed with the HPC are available at www.mass.gov/hpc. The specific notices submitted by Partners Healthcare System and South Shore Hospital are available here pdf format of Partners HealthCare System, Inc. Notice of Change
and here pdf format of South Shore Hospital Notice of Material Change
file size 4MB .

The HPC is the new independent state agency that monitors health care delivery and payment system reforms and develops policies to reduce overall cost growth while improving the quality of patient care. To learn more, please visit www.mass.gov/hpc or follow us on Twitter @Mass_HPC.

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