RI Insurance Commissioner Says Healthcare Costs Will Likely Increase if Partners Buys CNE

Friday, March 16, 2018


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The Rhode Island Health Insurance Commissioner released a market impact study to assess the proposed transaction of Partners acquiring Care New England and how it could affect the affordability of commercial health insurance in Rhode Island. 

The report finds that Partners would be motivated to raise revenues, which would impact commercial insurance rates and therefore adversely impact Rhode Island employers and the Rhode Island health insurance consumer.

Click here to read the entire report.

“The Health Insurance Commissioner’s market impact study is the first review by a regulatory agency of the proposed acquisition of CNE by Partners and it raises real concerns about motivations and outcomes if this ill-advised merger were to come to fruition,” said Bill Fischer, spokesperson for CharterCARE.

The Report

The study includes interviews with health insurers in Rhode Island, Massachusetts, and New Hampshire because Partners has acquired hospitals in both states over the past several years.

“Many interviewees indicated that they believed that Partners would seek higher rates for CNE hospitals, based on their understanding of Partners’ past behavior in Massachusetts.

One interviewee said, “Our experience with Partners tells us they like to solve problems with revenue solutions. They will say, ‘hit this price point or we are out of your network – including the whole Massachusetts network.’” Another interviewee, however, observed that over the past few years Partners had “been on good behavior” and was agreeing to rate increases that were in line with the market, in contrast to its earlier market behavior. However, it is likely that any such 'good behavior' is related to the regulatory oversight and scrutiny provided by the Commonwealth of Massachusetts; it may not reflect Partners’ approach in new markets such as Rhode Island,” says the report.

The report states that Partners Healthcare is the largest health system in New England. Partners hospitals and medical groups tend to have the highest relative prices among Massachusetts providers. In particular, Massachusetts General Hospital and Brigham & Women’s are among the highest priced general acute care hospitals in the state.

Interviewees reported that the Partners physician organizations are up to 50% more expensive than the typical Rhode Island commercial physician’s fee schedule.

The report concludes, “Whether these efforts would increase health care spending more than alternative future scenarios for CNE, we can only speculate. Partners certainly enjoys regional market clout with commercial insurers that is unmatched. However, even if Partners does not acquire CNE, some action by CNE is inevitable, as its current rate of financial loss is not sustainable.

If only because of CNE’s financial distress, we find it likely that if Partners acquired CNE it would take actions to increase revenue to CNE, which, if successful, would adversely impact the affordability of Rhode Island commercial health insurance premiums in the immediate term. The financial realities imply that another acquiring entity would be likely to attempt the same, albeit perhaps with less insurer leverage than Partners."


Related Slideshow: 7 Implications and Unintended Consequences of a Care New England and Partners Merger

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Providence does not usually do well in mergers

Remember Providence Gas, Fleet Bank, and Narragansett Electric?

Big employers, deep community involvement, and significant charitable donors — all were consumed and in each case, the number of employees left in Rhode Island by the succeeding company is a fraction of the once independent venture.

To the victor goes the spoils.

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As if the Boston economy isn't good enough, and the Providence economy couldn't be more stagnant

The cityscape of Boston is littered with cranes. Boston Business Journal maps the construction projects utilizing cranes in Boston (see image) and the number of projects is staggering. 

In Providence, there few construction projects and not a crane to be seen. The last thing Providence needs is for another one of its largest employers to be merged into a Boston mega-organization. The likelihood is that jobs will be lost or consolidated to Boston - basic functions like purchasing, accounting, etc. will be lost. 

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Harvard beats Brown in Ivy League match-up

Harvard Medical School is ranked as the #1 research-based institution in America by U.S. News and World Report.

Partners Healthcare’s academic partner is Harvard.

In contrast, Care New England’s academic affiliation is with the Warren Alpert Medical School of Brown University. Brown’s best ranking is 21st for primary care - and is ranked for research way back at #31.

One of the biggest losers in the merger could be Brown's medical school.

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Care New England is RI’s 2nd largest employer, so what will It be in 2 Years?

According to the RI Department of Labor and Training, Care New England is Rhode Island’s second largest employer.

Lifespan is the largest: 12,050

Care New England: 8,500

CVS: 7,800

Cities like "Meds and Eds" (the medical and educational business segments), but Providence and all of Rhode Island is likely to lose high paid, highly educated jobs as a result of this deal.

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Care New England Continues to Struggle

Despite hopes that closing Memorial Hospital would solve the financially beleaguered Care New England's economic woes, new financial documents unveil that CNE continues to struggle.

Additionally, the pursuer - Partners HealthCare - is also making cuts. The Boston Globe unveiled the Partners is cutting about 100 of the company’s tech workers that their jobs were being outsourced to India to cut costs.

“Many of the employees have worked for Partners for several years, or even decades, and are struggling with the company’s decision. Almost all are coders — people who scour patients’ medical records to pinpoint billable services — and earn upward of $40 an hour. Coders in India earn a fraction of that amount, making overseas coding an attractive way for hospitals to cut costs,” wrote the Boston Globe.

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Can the unions battle?

Within hours of GoLocal breaking the news of the merger, the United Nurses and Allied Professionals (UNAP) President Linda McDonald, RN, released the following statement today:

"This proposed merger has the ability to impact thousands of jobs and the quality of care in Rhode Island and should be thoroughly scrutinized. Like most Rhode Islanders, we only recently learned of this proposal but expect Care New England and Partners HealthCare to be transparent in their process and begin a conversation with our union about the effect any deal would have on our members and our patients.  

Memorial Hospital provides critical care to scores of Blackstone Valley residents every year and preserving its status as a fully-functioning community hospital will be among our top priorities as this process continues to unfold. 
The onus is now on Care New England, Partners HealthCare and Prime Healthcare Services to make the details of this proposal public and to do it quickly so that workers, patients and state regulators may begin asking the appropriate questions."

The nurses represents nearly 1,400 registered nurses, CNAs, ER techs, surgical techs, orderlies, endo techs, environmental employees and ancillary staff at Kent and Memorial hospitals.  But, will they have any impact on the decisions?

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Speaking of Lifespan - will they be forced to merge with a Boston partner?

Lifespan is having its financial challenges too. While Care New England lost $53 million last year, Lifespan's losses were $40 million. The Lifespan losses were smaller proportionately to the healthcare group's overall budget and it does not have the cash crunch that Care New England was battling.

In February, Lifespan announced it had has entered into another Boston Hospital agreement. This agreement with Dana-Farber Cancer Institute is a long term agreement with the goal of advancing cancer treatment and research. Lifespan previously entered into an agreement with New England Medical Center and that deal led to years of protracted litigation to unwind. Lifespan also ran into a legal battle with Tufts Medical Center.

Will Partners' potential arrival in the market force Lifespan to affiliate?


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