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Rivals, consumer groups watching hospital deals

Rivals, consumer groups watching hospital deals

By Robert Weisman

Globe Staff / December 10, 2010

Consumer advocates and competing hospitals yesterday said they will closely monitor Steward Health Care Systems LLC’s proposed acquisition of Merrimack Valley Hospital, of Haverhill, and Nashoba Valley Medical Center, of Ayer, for an undisclosed sum.

“We will focus on what this means for the communities and the health care they receive,’’ said Amy Whitcomb Slemmer, executive director of Health Care for All, a Boston consumer advocacy group. “We want to listen carefully to the patient experience to make sure there are no barriers to care and the services people depend on.’’

Donald K. Stern, a Boston lawyer who represents Merrimack Valley rival Lawrence General Hospital and other hospitals, called on the attorney general’s office to assess the purchase deal as part of its oversight of Steward.

That continuing review was a condition of Attorney General Martha Coakley’s recommendation in October that Steward, a Boston holding company formed by New York buyout firm Cerberus Capital Management, be allowed to take over nonprofit Caritas Christi Health Care last month and convert it to a for-profit business.

The six-hospital chain owns St. Elizabeth’s Medical Center in Brighton, Carney Hospital in Dorchester, and four other Catholic community hospitals in Eastern Massachusetts.

“We trust that the attorney general will take a hard look at each step along the way to assure that [Steward’s] activities don’t undercut competitors,’’ Stern said. For example, competing hospitals worry that Steward, drawing on Cerberus money, might try to expand by poaching doctors from other hospitals.

Steward, under the aggressive leadership of chief executive Ralph de la Torre, will be a strong driver of change for Massachusetts health care, said Steven J. Tringale, managing director of Hinkley Allen & Tringale, a health care consulting firm in Boston.

As hospitals shift from a fee-for-service to a performance-based pay system that rewards doctors and hospitals with better medical outcomes and lower costs, Steward can take advantage of its critical mass and its access to funding to upgrade data systems that help physicians monitor health care outcomes before other hospitals do, Tringale said.

“Steward is going to apply a little extra competitive pressure to the marketplace,’’ Tringale said. “The pressures were already there, but Steward is changing the acceleration curve. Whether they’re nonprofits or whether they’re for-profits, other players will have to respond.’’

The acquisition of the Merrimack Valley and Nashoba Valley hospitals will require approval by the state Public Health Council, which is being asked to grant new hospital licenses to Steward. Spokesman Chris Murphy said Steward filed its application yesterday. Julia Hurley, a spokeswoman for the state Department of Public Health, said the agency would review the submission.

Executives from Harvard-affiliated Boston teaching hospitals offered contrasting views on how Steward’s growing hospital system could affect health care in Massachusetts.

The tentative agreement to acquire Merrimack Valley and Nashoba Valley is not likely to alter the competitive landscape, said Paul F. Levy, president of Beth Israel Deaconess Medical Center, which has a clinical affiliation with Lawrence General Hospital.

“There is nothing to suggest that there will be a major change in the services provided by the two hospitals or their position in the community,’’ Levy wrote in an e-mail yesterday.

But Peter K. Markell, vice president of finance at Partners HealthCare System Inc., the Boston parent of Massachusetts General Hospital and Brigham and Women’s Hospital, said Steward could offer more competition for downtown teaching hospitals if de la Torre is successful in stemming the leakage of patients from Eastern Massachusetts communities to Boston.

Markell said that Mass. General and Brigham and Women’s are also community hospitals for residents in and around Boston.

If the Steward network draws away routine health care services, it could drive up the cost of the more complex medical care offered at Partners hospitals, he warned.

“Any competition is always a threat,’’ Markell said.

Robert Weisman can be reached at