Facing regulatory headwinds and tensions over expansion plans, Harvard Pilgrim and Partners have suspended merger talks that many skeptics believe would have been difficult to finalize.
Harvard Pilgrim Healthcare and Partners HealthCare have suspended merger talks amid reports that the deal was raising concerns by Massachusetts state officials.
"Now isn't the right time to try to push something like that ahead," Partners CEO David Torchiana told the Boston Globe. "I don’t think either organization is sure that it's something that’s actually possible to achieve . . . in this environment right now where there’s such intense scrutiny of every move."
Michael Carson, president and CEO of Harvard Pilgrim Health Care, said in a statement to HealthLeaders Media that: "Our discussions with Partners HealthCare have always been focused on exploring ways we can improve and enhance the patient experience while helping to control costs."
"We continue to evaluate opportunities for collaboration with Partners on this important mission," Carson said.
The talks, which were first reported on sometime last spring, were done largely out of the limelight, but it quickly brought the attention of state officials who raised concerns about increased costs of care to patients post-merger.
WBUR, which first reported that the talks were off, cited unnamed sources who said Partners suspended talks to focus on internal matters. According to WBUR, tensions were forming within Partners' leadership over two sets of expansion plans that include the acquisition of Care New England in Rhode Island. A proposed partnership with Lifespan is off.
The second expansion plan, involving a collaboration with Harvard Pilgrim, raised questions about the complexity of having doctors and insurers manage care and costs together, WBUR reported.
Throughout the negotiating process, observers had said the deal would have to clear some high hurdles.
Kristina Minnick, professor of finance at Bentley University, told the Boston Herald that the federal government is not receptive to large, horizontal mergers in the healthcare sector.
"I think it’s going to be really difficult for the deal to go through," Minnick told the Herald. "Unless they’re able to show that they can offer better service at a lower price — which will be difficult — I doubt at the state level Massachusetts and the attorney general will let it pass."
Even Massachusetts Gov. Charlie Baker, the former CEO at Harvard Pilgrim, had expressed skepticism about the success of the deal.
"There are three really big questions. The first one is what’s the strategic rationale behind it and is it legitimate and justified," Baker told the Herald. "The second is what's it going to do to people's ability to access healthcare here in the commonwealth and the third question is what's it going to do with respect to the cost of health care."
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Partners CEO David Torchiana says the deal's not 'actually possible' given the high scrutiny by regulators.
Harvard Pilgrim CEO Michael Carson says the health system will 'continue to evaluate opportunities for collaboration with Partners.'
State regulators had raised about the cost of care for consumers under the merger.