A proposed merger between the parent companies of Exeter Hospital and Wentworth-Douglass Hospital in Dover is “unlawful,” according to the Charitable Trusts Unit at the Attorney General’s office, because it would likely decrease competition and increase the cost of health care on the Seacoast.
The decision, announced Friday by Attorney General Gordon MacDonald, comes after a yearlong review by that office’s Consumer Protection and Antitrust Bureau.
“Our most important duty is to protect the public, and we will not hesitate to use the enforcement tools available to us to do so,” MacDonald said. “New Hampshire patients already pay some of the highest prices for health care in the country.”
Last April, Exeter Health Resources Inc. (EHR) and Wentworth-Douglass Hospital (WDH) filed an “agreement for affiliation,” proposing to create a new entity that would acquire both organizations. Three years ago, the Dover hospital became a subsidiary of Massachusetts General Hospital.
Under the proposed transaction, the new company (referred to as “Newco” in the AG’s report), would become a subsidiary of Mass. General, which in turn is part of Partners HealthCare. The parties would integrate to form a New Hampshire-based regional health care network that would become part of the MGH system of community hospitals.
The Charitable Trusts’ report cites concerns about the adverse effect of this merger on Seacoast health-care consumers. Exeter Hospital and Wentworth-Douglass are only 18 miles apart and offer many of the same inpatient and outpatient services, the report states, and both own “a significant number” of health care professional practices.
MacDonald noted that Part 2, Article 83, of the New Hampshire Constitution requires “free and fair competition in the trades and industries,” and that the State’s anti-trust law and Consumer Protection Act protect free and fair competition. “Based on our investigation, we have concluded that this transaction implicates our laws protecting free and fair competition and therefore threatens even higher health care costs to be borne by New Hampshire consumers,” he said.
But in a joint statement, the three health care organizations said that the Attorney General’s concerns are “wholly unfounded,” and that the proposed merger would increase access to “high-quality specialized care” and take advantage of cost efficiencies.
“The proposed affiliation is critical to ensuring the long-term sustainability of local, high quality not-for-profit health care services in the Seacoast Region for generations to come,” said Kevin Callahan, president and CEO of Exeter Health Resources. “We will be able to bring more care to the Seacoast than any of us could do on our own.”
Since Wentworth-Douglass Hospital became a subsidiary of MGH, the hospital has seen millions of dollars in savings and added more than 300 new jobs, a hospital official said.
“The collaboration between Wentworth-Douglass and Mass. General has meant more expert, trusted care available here locally,” said Gregory Walker, president and CEO of WDH. “The proposed affiliation will only help to bring even more services to the communities we serve.”
That includes creation of a Level II neonatal nursery and investing in behavioral health and substance use disorder treatment services, he said.
The AG’s report states that it will not “discuss the conditions that may be necessary to assure compliance” with the state’s standards for acquisitions. But it said if the parties are able to resolve the problems with the current proposal, they would have to file a new application for review.
On the other hand, it warned, should EHR, WDH and MGH “take further steps to consummate the transaction despite the objection set forth in this report, the Charitable Trusts Unit will bring judicial proceedings and seek injunctive relief.”
In their joint statement, the health care organizations seemed undaunted by the setback.
“We remain optimistic that the parties can continue to have an open dialogue with the regulators or government officials about this important affiliation,” said Peter Slavin, president of MGH. “We remain fully committed to seeing this transaction through and are confident that the Attorney General’s office will ultimately determine that our affiliation will pass antitrust review.”
Exeter Health Resources includes Exeter Hospital, Core Physicians, and Rockingham Visiting Nurse Association & Hospice. The nonprofit Wentworth-Douglass Hospital organization includes the hospital, urgent care and testing centers; Wentworth Health Partners; The Works Family Health and Fitness Center; and the Wentworth-Douglass Foundation.