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May 7, 2018

Partners HealthCare, Harvard Pilgrim Health Care in talks about possible merger

Daily Briefing

    Partners HealthCare and insurer Harvard Pilgrim Health Care for several months have been discussing a range of deals, including a possible merger, officials from both companies confirmed Friday, Priyanka Dayal McCluskey reports for the Boston Globe.

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    A potentially major merger

    If Partners HealthCare ultimately acquires Harvard Pilgrim, the deal could have significant implications for the health care landscape in Massachusetts, Dayal McCluskey reports. Partners is the dominant health care provider in Massachusetts, Dayal McCluskey reports, with a network of about a dozen hospitals—including Massachusetts General Hospital and Brigham and Women's Hospital—and thousands of doctors. Partners in 2017 reported $53 million in operating gains on revenue of $13.4 billion.

    Harvard Pilgrim sells insurance to both employers and consumers and has about 1.2 million members. The insurance company in 2017 reported an operating loss of $28.3 million on revenue of $3 billion.

    Harvard Pilgrim CEO Eric Schultz said the discussions were not prompted by the insurer's financial losses and that they instead grew from regular contract negotiations between the insurer and health system. The goal of the discussions with Partners, according to Schultz, is to help patients navigate the health care system and to improve care management for individuals with chronic conditions.

    Rich Copp, a spokesperson for Partners, said the health system "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," adding that Harvard Pilgrim "is certainly among those organizations."


    According to Dayal McCluskey, Partners and Harvard Pilgrim are still holding discussions—which could take months or years to complete—and therefore have not filed any proposed plans with state regulators.

    Massachusetts Gov. Charlie Baker (R), who previously served as CEO of Harvard Pilgrim, said Friday that state officials would carefully review any proposed deal between the companies. "It's going to be incumbent on them to make the case for why this is a good idea," he said, adding, "The big thing is, what does this mean with respect to costs? Why would this be good for the health care system overall, and for patients and customers? And what's the rationale?"

    A spokesperson for the state attorney general's office on Friday said Attorney General Maura Healey (D) would examine any proposed deal between the insurer and health system, including a proposed merger's effect on consumers and whether it could violate antitrust laws  (Dayal McCluskey, Boston Globe, 5/4).

    Get the field guide to hospital partnership and affiliation models

    The field guide to hospital partnership and affiliation models

    Behind the flurry of M&A in recent years, a deeper trend of hospital integration is underway: the emergence of alternative partnerships that secure many of the same benefits of M&A without the financial and legal commitment: Clinical affiliation, regional collaborative, accountable care organization, and clinically integrated network.

    This guide defines these types of partnerships and offers benefits, drawbacks, and examples of organizations in each.

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