Judge nixes Coakley deal that would have let Partners HealthCare merge with hospitals

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BOSTON — A high-profile deal that would have allowed Partners HealthCare to merge with South Shore Hospital has collapsed.

Suffolk Superior Court Judge Janet Sanders on Thursday rejected the agreement that Partners worked out with former Attorney General Martha Coakley to allow the merger, which would have also let Partners acquire Hallmark Health Systems, which owns Lawrence Memorial Hospital in Medford and Melrose-Wakefield Hospital.

Attorney General Maura Healey, sworn into office last week, had expressed concerns about the deal.

Healey said on Monday that her office would enforce the agreement if the court approved it, but would attempt to block any future merger if the deal was rejected.

Healey restated her opposition Thursday.

"In light of the court's ruling, it is now Partners' decision whether to proceed with the acquisition of South Shore Hospital," Healey said in a statement.

"Our office is prepared to litigate to block this transaction if Partners chooses to move forward. We remain committed to tackling the challenge of controlling health care costs while also promoting quality and access," she added.

Partners CEO Gary Gottlieb called the decision very disappointing for all involved in the process. He said his leadership team will evaluate their options.

"The judge has said 'no' to an agreement that we believe would have paved a pathway to delivering high-quality care closer to home for patients and their families in a lower cost community-based setting," he wrote in a statement sent out after the decision was released.

Sanders indicated in November that she would wait until Healey took over as attorney general before ruling on whether to accept or deny the deal.

The deal would have allowed Partners to expand, while setting price caps and other consumer protection measures and while limiting further Partners expansion in eastern Massachusetts.

Healey said on Monday that since the initial deal was reached, the court had been presented with additional information from insurers, health care providers and the state's Health Policy Commission, which she said have raised concerns about the agreement's ability to control costs over time.

The commission released a report last year criticizing part of the agreement that dealt with Partner's planned acquisition of Hallmark Health Systems.

That report prompted Coakley to renegotiate that portion of the deal with Partners under a provision of the original agreement that allowed both sides to reopen negotiations in the event that the commission determined there would be a "likelihood of materially increased prices" as a result of Partners' acquisition of Hallmark.

A coalition representing health care providers including Atrius Health, Beth Israel Deaconess Medical Center, Lahey Health System and Tufts Medical Center said the decision to deny what they said would have been "an unprecedented expansion of the market's largest health care system" was the right move.

Partners employs 6,500 doctors and operates Massachusetts General Hospital, Brigham and Women's Hospital and six other acute care facilities.

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