Dive Brief:
- Hallmark Health System has broken off exclusive talks to be potentially acquired by Partners HealthCare after legal and regulatory review put the deal on pause for almost two years.
- Partners expansion plans have been under scrutiny from regulators and have been criticized by competitors. The company had deals to acquire South Shore Hospital in 2012 and Hallmark in 2013, but an initial endorsement from the Massachusetts attorney general was soured by opposition from regulators and the courts.
- A new Massachusetts attorney general was elected in 2014 and she rejected the previous approval of Partner's expansion as did a court ruling in January. Partners announced in February it would not pursue the acquisition of South Shore.
Dive Insight:
Hallmark's CEO Alan Macdonald said in a company memo to employees it would look more broadly for a new partner. "We know amid a changing regulatory landscape we must take a new look at the best ways to achieve our goals. We are fortunate to work in proximity of the most reputable providers of healthcare in the country. There are many opportunities for us to explore."
Partners spokesman Rich Copp, said, "After careful consideration, the leaders of Hallmark and Partners have concluded that now is not the optimal time to pursue a merger."
A review of the deal by the Massachusetts Health Policy Commission said it would increase private insurers' costs by $15.5 million to $23 million a year "due to material price effects." Partners would have gained market clout with the deal, according to the commission, stating, "This transaction will reinforce Partners' position as the provider with the highest share of inpatient and primary-care services in its northeastern Massachusetts service areas."