Saturday, October 21, 2006

Hospital Mergers

There is a preliminary agreement for Partners Health Organization, a non-profit group that owns Mass. General Hospital among others, to acquire the hospitals on the islands of Martha's Vineyard and Nantucket. The deal will likely be good for the islands as the quality of medical care should improve.

The deal should be very good for Partners due to the arcana of Medicare reimbursements. Both island hospitals are classified as "critical access" in Medicare terms. They are the only hospitals in the state so classified. For some strange reasons if a state has hospitals in this classification Medicare bases its reimbursement to the other hospitals in the state on a national figure. And, as we well know, Massachusetts is not a cheap state in which to live. By removing these two hospitals from the critical access category, Partners and other hospitals in the state will see their Medicare reimbursements rise. It's expected that they could rise by as much as $250,000,000.

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