Directors of the Massachusetts Policy Board this week began the enormous and complex task of evaluating the proposed sale of Steward Healthcare’s physician network to UnitedHealth Group’s Optum.
“I think the underlying question is what happens to patients and what happens to small community hospitals in terms of their ability to maintain viability and provide care,” Barbara said. Secretary Blakeney said in his speech. thursday meeting. “The effects are surprisingly complex and potentially harmful.”
Stewardship Health, Steward’s Physician Network; it will be sold According to the first submission to the committee, it was submitted to Optum. Steward Group, the third-largest physician network in the state that employs 2,950 doctors, is under threat from the financial crisis of the cash-strapped hospital system in Texas.
Massachusetts officials increase oversight of troubled Steward Healthcare
Optum currently operates two physician practices in Massachusetts (Reliant Medical Group, acquired in 2018 and Atrius Health Services, acquired in 2022), as well as nine locations in Massachusetts. It also operates MedExpress, a chain of emergency centers. All told, Optum manages about 975 physicians in the state, said Kate Mills, the commission’s senior director of market oversight and transparency.
The move to absorb Stewardship Health is the latest expansion move by UnitedHealth, which currently employs or is affiliated with 10% of all physicians in the United States. acquired or employed Last year alone, there were 20,000 doctors.
As part of the HPC review, staff is working to identify which physicians will be affected by the sale and what their relationship with Steward’s hospitals will be.Physical Exercise Sale is part of Steward’s 6-Point Recovery Framework released in February.
Mills cautioned that HPC’s review process, which must be completed along with other reviews by state or federal antitrust authorities before the sale can proceed, is at a very early stage.
Because Steward Systems has not yet submitted a complete notification of material changes, a 30-day preliminary review period will begin. If the committee determines that the sale is likely to have a material impact on the market, it may decide to begin a multi-month review process.
“It’s going to be very difficult because it’s not just this deal,” said Commissioner David Cutler, a professor of applied economics at Harvard University. “This is going to have an impact on hospitals and other health care providers in the region. So it’s difficult to do that, because it fills in ‘what it is,’ so to speak,” and at the same time it’s difficult to do that, and it’s also important for patients and spending. That’s difficult to do, given the scope of the impact. Therefore, we need to take our time and make sure everything is done correctly. ”
In response to questions from Mr. Cutler about what was missing from Mr. Steward’s initial submission and when the committee could begin the process in earnest, Mr. Mills said the requested information was confidential. He said he could not answer publicly.
“This is a priority that people need to work on quickly,” she said. “As such, we have worked closely with stakeholders to obtain the information we need to carry out this review.”
Since 2013, HPC has received notices of 168 provider transactions, including mergers, changes in ownership, provider-to-provider contract entities and new alliances, Mills said. More than half of these transactions (86 in total) involved commercial entities like Steward.
Steward’s financial spiral and proposed deal with Optum have angered the state’s congressional delegation and top officials. Massachusetts officials.
Sen. Elizabeth Warren: “I’m approaching this with great skepticism.” said to boston globe on monday.in last week’s letterthe Massachusetts delegation called on the U.S. Department of Justice and the Federal Trade Commission to “scrutinize this acquisition and oppose it if it reduces competition and increases UnitedHealth’s market power.”
Steward Healthcare’s financial difficulties, which have left it unable to pay vendors and pay rent, have affected 31 private hospitals in eight states, including nine in Massachusetts, leading to private An intense investigation into the role of equity began. Lawmakers at the state and federal level are considering options to more tightly regulate private equity investing.
Recent special hearing He tasked Steward and CEO Ralph de la Torre, who was not present, with private equity’s impact on the health care system. HPC Commissioner received on Thursday presentation As private equity expands and health systems become more integrated, what are the impediments to private equity in healthcare?
The goal of private equity firms is to “increase the value of acquired companies, quickly turn them around, and sell them for a profit within three to seven years,” said Yue Huang, a HPC policy researcher. . “As such, private equity firms are pursuing their own strategies as they operate on very short timelines, creating instability in the healthcare market.”
Huang cited leveraged buyouts and sale-leasebacks as examples. A private equity firm may acquire a company with debt, use that company as collateral, and shift liability to the acquiring company rather than to the private equity group. In sale-leaseback, “many of us are learning it for the first time, in part because of the stewardship situation,” Huang said, and the private equity owner of a physical factory invests the property. He said it would be sold to a trust. , healthcare workers will be paying rent on the property they previously owned.
Huang said private equity investments in health care are accelerating in Massachusetts, particularly among behavioral health, dental and home health providers, as well as certain specialty providers. Executive Director David Seltz said many of the transactions found in the HPC investigation would not have been brought to the committee’s attention through the normal process due to definitional loopholes or financial criteria.
Panelists at the state Legislature’s private equity hearings called for greater state oversight of health care transactions, closing loopholes in laws that restrict companies from hiring medical practitioners, and making ownership and business structures more public. It recommended increasing transparency through requirements such as public reporting.
Broadly speaking, Huang said, while results can vary by industry, private equity acquisitions often result in higher prices, leading to higher utilization and lower quality of care. This was revealed through HPC research.
Blakeney, a former president of the American Nurses Association, said, “I have heard and liked all of the proposals regarding regulatory and procedural processes. I am happy to support all of them.” “But I think there’s another layer on top of that, and that layer has to do with how predatory private equity is, and why on earth would a predatory process get involved in the health care system?” I know this may be very naive, and I’m not a lawyer or an economist, but part of the discussion is how do we keep them out of health care? I thought that was necessary.”
Commissioner Renato Mastrogiovanni, president and CEO of HealthView Services, offered a measured rebuttal.
“The more regulations there are, the less valuable those companies are and the less interest they get from private equity,” he said. “So that creates another potential issue. We’ve seen a lot of the downsides associated with private equity and equity involvement. What impact will it have?”
HPC plans to compile a white paper for publication that will include research, a scan of previous academic literature, and some policy considerations, Selz said. Commissioners ended the meeting on a high note, voting to “maintain” the state’s health care cost growth benchmark. subject of much debate Last month it was 3.6%.
“As we vote today to set health care cost growth benchmarks for 2025, HPC will continue to monitor health care cost growth containment and evolve our overall approach to mitigating health care cost growth. We have advanced a comprehensive set of recommendations to modernize and improve the quality of our products,” said Selz. These are the regions with the highest spending growth. ”
this article It first appeared commonwealth beacon Republished here under a Creative Commons license.
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