November 17, 2023
Dear Interested Readers,
Mergers Change Everything
The header today is a photo of a piece of commemorative glassware that was presented to each of the participants in the long discussions and negotiations that resulted in the merger of Harvard Community Health Plan and Pilgrim Health Care. As the Chairman of the Physician Council and a board member of HCHP, I was a participant in the crafting of the merger. It was yet another opportunity for professional development. The experience taught me a lot about why mergers and acquisitions occur in healthcare, and over the next few years, I learned why many healthcare mergers don’t achieve their lofty objectives.
Between 1994 and 2012, I was involved in several discussions about mergers and acquisitions. Some were completed. Some never got off the ground. Some made it, and then they dissolved in disappointment and anger. Most did not achieve the lofty objectives that they offered to regulators and the public as they sought approval and to explain why they were occurring.
What most of these efforts had in common was that both parties were feeling some pressure from their environment and were seeking to find a solution to market pressures. I do know that some acquisitions are between strong enterprises that are seeking to gain market share to create even more dominance and profit by taking on a vulnerable asset. The stronger entity is seeking to get even stronger, and the weaker entity is hoping to salvage something or at least avoid the pain of failure. My guess is that many discussions are usually between two organizations that are in the process of failing. In most of the discussions in which I participated both parties had some sort of problem that motivated them to seek a partner.
I am skipping about three years in my chronology if I jump from the “doctors’ revolt” in 1990-91 to the HCHP merger with Pilgrim Healthcare that was completed on January 19, 1995. I will go back to my chronology after a brief report on an observation this week that got me thinking about mergers.
Harvard Pilgrim Health Care occasionally runs ads on New Hampshire’s only TV station, WMUR in Manchester, which is the station that I most frequently watch. Recently, I noticed that there was a new tagline on the Harvard Pilgrim ads— “a point 32 company.” I asked myself, “What is a ‘point 32 company’?” A question these days is an indication that Google should be consulted. I typed into Google, “What is a point 32 company?” What popped up was:
Our Family of Companies
As a leading not-for-profit health services organization, we are comprised of a family of companies including:
Harvard Pilgrim Health Care, providing health benefit plans, programs, and services to more than 1.1 million members in Massachusetts, New Hampshire, Maine, Connecticut, and beyond. A leading not-for-profit health services company, Harvard Pilgrim Health Care guides members — and the communities it serves — to better health. Founded by doctors nearly 50 years ago, it builds on that legacy and partnerships with an expansive network of doctors and hospitals to improve health outcomes and lower costs through clinical quality and innovative care management.
Tufts Health Plan, nationally recognized for its commitment to providing innovative, high-quality health care coverage, touches the lives of more than 1.1 million members in Massachusetts, Rhode Island, and Connecticut through employer-sponsored plans, Medicare, Medicaid, and Marketplace plans, offering health insurance coverage across the life span regardless of age or circumstance. It ranks consistently among the top health plans in the country based on quality and member satisfaction.
CarePartners of Connecticut, offering Medicare Advantage plans to Connecticut’s older adults. This joint venture harnesses the expertise of Hartford HealthCare and Tufts Health Plan, aligning physicians, hospitals, and a health plan together: increasing quality and improving the coordination of care for members.
The Harvard Pilgrim Health Care Institute’s Department of Population Medicine, the nation’s only medical school appointing department based in a health plan. This unique collaboration between Harvard Pilgrim and Harvard Medical School is focused on innovative teaching and research to address health care issues.services to more than 1.1 million members in Massachusetts, New Hampshire, Maine, Connecticut, and beyond. A leading not-for-profit health services company, Harvard Pilgrim Health Care guides members — and the communities it serves — to better health. Founded by doctors nearly 50 years ago, it builds on that legacy and partnerships with an expansive network of doctors and hospitals to improve health outcomes and lower costs through clinical quality and innovative care management.
Integra Partners makes in-home care accessible to local communities while improving health outcomes and lowering costs.
Health Plans, Inc., (HPI), one of the largest third-party administrators of self-funded plans in New England, delivering highly customized solutions to employers across the country.
MedWatch, an HPI affiliate, a population health management company delivering a wide range of services from biometric screening and chronic disease management to care management and utilization review.
TrestleTree, another HPI affiliate, providing behavior-focused coaching to support individuals, families, workplaces, physician practices, and communities.
Employers Health Network (EHN), developing trusting relationships between self-funded employers and health care providers and creating savings opportunities to drive high-value health care.
In addition are our Accountable Care Organization (ACO) Collaborations, independent partnerships between Tufts Health Plan and two provider groups. We partner with Cambridge Health Alliance and UMass Memorial Health in support of MassHealth reform efforts. The ACOs provide integrated, coordinated care for our Medicaid population that improves overall health with more efficiency.
The list of “Point 32 Health” participants and their business activities surprised me. I know from experience that choosing the new name for a merged entity is one of the critical points in any merger discussion. An even more difficult point is often who will be the CEO. When HCHP and Pilgrim Health Care merged the naming process was easy. Both organizations had parts of their original name preserved. The CEO decision was also relatively easy since the HCHP CEO was looking forward to an early retirement and the Pilgtim CEO was in his forties.
“Point 32 Health” is what the marketers have decided to call the recent Harvard Pilgrim merger with Tufts Health Plan. They reason that the compass has 32 points and in some way that connects to their mission. The fullness of their reasoning escapes me. I do know that picking a name is a major part of any merger discussion. I guess that the name Point 32 Health has the advantage of keeping the fact of the merger obscure to most consumers. The trick worked on me. The fact that Harvard Pilgrim and Tufts were merging was old news from 2021, but somehow I had missed out on the “Point 32 Health” part of the deal. Looking a little further I got a clearer picture of what the new entity wanted the public to think about them.
The combination of Tufts Health Plan and Harvard Pilgrim Health Care represents the coming together of two of New England’s most iconic nonprofit health care companies. Representing nearly 90 years of combined service to our members and the community, together we are building upon our diverse legacies and innovative collaboration by making it our purpose to guide and empower healthier lives for everyone — no matter their age, health, race, identity, or income.
That’s why we’ve named our new corporate entity Point32Health. The Point32Health name is inspired by the 32 points on a compass. It speaks to the critical role we play in guiding and empowering the people we serve to achieve healthier lives.
I must say that even with the explanation, the new name doesn’t make a lot of sense to me. I applaud the objective of “making it our purpose to guide and empower healthier lives for everyone — no matter their age, health, race, identity, or income.” The cynic in me says that what makes more sense is that both parties had a need to be able to more effectively compete with Blue Cross in a very competitive market.
There has been mutual respect between Harvard Pilgrim and Tufts Health Plan for a long time. When Harvard Vanguard exited Harvard Pilgrim in 1998 one of our immediate objectives was to be available to patients who were insured by Tufts Health Plan. During my tenure as Harvard Vanguard CEO, we successfully migrated about 20,000 patients from the Harvard Pilgrim “senior care program” to the Tufts Medicare Advantage program which we felt was a better product for the patient and was a value-based opportunity for us.
Early on, Tufts had been led by Dr. Harris Berman, a physician from New Hampshire who helped found the Mathew Thornton Health Plan which operated on principles that were almost identical to the ideals we embraced at HCHP. If you read the linked article you will see that there was a great similarity between HCHP and Matthew Thornton which was eventually acquired by Anthem Blue Cross. Dr. Berman brought some of that HCHP-like culture to Tufts. Nevertheless, I will continue to assert the belief that the best explanation for why Harvard Pilgrim and Tufts have finally joined forces as the core partners in Point 32 Health is to facilitate their survival in a market dominated by Blue Cross.
According to data from the state of Massachusetts in 2018, Blue Cross had 43% of the insurance market in Massachusetts. HPHC and Tufts each had 12%. United Healthcare also had a 12% market share. Ironically, Harvard Vanguard and Atrius Health are now owned by Optum which is a subsidiary of United Health Care. My assumption is that in the interim Blue Cross and perhaps United have increased their market shares which is a threat to both Harvard Pilgrim and Tufts.
Pardon the diversion, but I think that the creation of Point 32 Health is yet another example of how market concerns are the driving force behind many of the mergers that occur in healthcare. It seems that the primary motivating concern in the delivery of healthcare in America is profitability. “Niche players” and even well-established enterprises like Harvard Pilgrim and Tufts are always vulnerable to the need to be acquired. I just wonder if market-driven mergers and acquisitions will ever result in our realization of the Triple Aim or will ever really improve the care of disadvantaged populations. There must be a better way to improve the care we need and address the social determinants of care than letting market forces drive care delivery.
Now, back to my long story. As the dust settled after the “doctors’ revolt” in 1991, we were able to actively participate in the choice of the HCHP CEO and were able to directly choose the President and Medical Director of the Health Centers Division of HCHP. As a member of the HCHP board, I was in favor of making Manny Ferris, the board’s chairman of its compensation committee and former president of Howard Johnson Hotels and Restaurants, the new CEO. I had developed great trust in Manny as we worked together on physician compensation, and I also knew that he had a warm friendship with Dr. Joe Dorsey whom I hoped would be reinstated as the CMO of HCHP.
Manny’s obituary is a very concise picture of who he was. He was a “Falstaffian” personality who had great theatrical skills. I once saw him deliver a great one-man show based on the life of Tennesse Williams as a charitable benefit. He had also been a very good athlete at Boston University. Most importantly, he possessed remarkable business acumen using his many social skills to create a positive climate. During his tenure, the concepts of total quality management and a focus on diversity, equity, and inclusion were introduced to our practices. The obit fails to note that after he left his role as the first CEO of Harvard Pilgrim Health Care, he became the Chairman of the Board of the Boston Medical Center.
The Physician Council advocated for the choice of Glenn Hackbarth as president of the Health Centers Division. Glenn had worked as an attorney and executive at Health and Human Services in the first Bush administration in the late 80s. He was hired by the departed CEO, but during his short experience at HCHP before the “revolt,” Glenn had developed a great reputation for his respect for the practice and his good judgment. Later, Glenn was also the first CEO of Harvard Vanguard, and after he left us, he was the Chairman of the Medicare Payment Advisory Committee (Med PAC) for many years. He is now on the board of the Kaiser Permanente Medical School.
Glenn won me over quickly by deciding that to really understand the practice he needed to work in one of our Internal Medicine practice units for about six weeks as a medical assistant. It was amazing to see him or imagine him, answering phone calls from patients, stocking exam rooms with medical equipment, and showing patients to exam rooms. There will be more about Glenn in the weeks to come.
The Physician Council had more trouble deciding who it wanted to name as CMO. There were many terrific candidates, but the one that the discussions kept returning to was Dr. Jennifer Leaning. If you remember, she was a late arrival to the big group meeting at the auditorium of the Museum of Our National Heritage. Most of us had never met her before she gave a terrific speech while standing at the top of the stairs that led into the auditorium. Her speech reminded us of our values and the objectives that Dr. Ebert had when HCHP was founded. Her words validated the sense of estrangement and violation that existed between the practice and the CEO.
After her impassioned speech, everyone knew her. Some of the HCHP board had been invited to the meeting. I think that it is quite possible that after her speech they knew that like it or not, a management change was necessary. Since leaving Harvard Vanguard not long after our launch, Jennifer has been a professor at the Harvard School of Public Health for most of the last 25 years where she has had a remarkable experience. As her academic profile reports:
Jennifer Leaning MD SMH is Senior Research Fellow at the Harvard FXB Center for Health and Human Rights at Harvard University, having served for nine years as Director of the Center from 2010-2018. She is a retired Professor of the Practice at the Harvard Chan School of Public Health (25 years) and retired faculty member of Harvard Medical School (28 years). From 2005-2010 she served for five years as co-founder and co-director of the Harvard Humanitarian Initiative at Harvard University.
Her research interests focus on issues of public health in war, international human rights and humanitarian law, and forced migration in conflict and climate change. She has field experience in assessment of these issues in a range of crisis situations (including Afghanistan, the African Great Lakes area, Albania, Angola, Bangladesh, the Chad-Darfur border, Israel-Palestine, Kosovo, Lebanon, Russia, Somalia, and Soviet Georgia) and has written widely on these issues, including preparation of reports and policy briefs to US and UN agencies, the International Criminal Court, and major NGOs.
We, the physicians practicing in the HCHP health centers, were exceptionally advantaged by having access to leaders like Glenn and Jennifer. They were great partners and such an effective duo that they were often referred to as “Glennifer.” For me and the continuing development of my medical moral sensitivities, the opportunity to work with colleagues like Glenn and Jennifer was yet another amazing opportunity for growth.
On the insurance side of HCHP, things were more difficult and the market pressures that I described last week continued. The acquisition of Multigroup and Rhode Island Group Health had helped the bottom line some, but there were continuing challenges. Pilgrim Health Care was essentially an IPA composed of practices mostly on the South Shore but with some practices north and west of Boston. Theoretically, and to worried minds, a merger between the two suffering entities might create one stronger organization. The challenge was to blend two management teams and very culturally different medical delivery systems into one effective organization. The conversation was further complicated by the concept that it would be a “merger of equals.” My focus was mostly to work with the physician leaders from the Pilgrim practices to develop a “Corporate Medical Council.”
My counterpart on the Pilgrim side was a terrific pediatrician and one of the founders of the Plymouth Medical Group, Dr. Walter Murphy. In the end, I think that Walter and I shared great similarities in our medical values even though our practices represented different medical cultures. With Walter’s support, I became the chair of the Corporate Medical Council. Unlike the Physician Council of the Health Centers where I was also the chair, the Corporate Medical Council was just a venue for making connections and discussing ideas and problems. We had no responsibilities described in the corporate by-laws. The group could make suggestions and hear reports, but it lacked the power to make or approve policy. The outcome of the merger might have been different if the Corporate Medical Council had been given more than an advisory role.
Another error in the affiliation was that after a short initial period when the CEO of HCHP, Manny Ferris, was to be CEO of Harvard Pilgrim, he was to retire and the position would be assumed by the Pilgrim CEO. That occurred in 1997 and things went downhill for Harvard Pilgrim from there with the organization going into receivership in late 1999. I factitiously said that the former Pilgrim managers only knew about market share. They had no conceptual understanding of the “medical loss ratio.” If you sell a dollar’s worth of healthcare for ninety cents you will grow for a while, but before long there will be unpaid bills.
Even as the merger was developing, there were concerns about the future of our practice. As the HCHP and Pilgrim talks were developing in 1994, the Physician Council, Glenn, and Jennifer called for an enlarged discussion within the health centers about our future. A task force of about 40 people began to meet regularly and discuss the possibility of becoming a separate professional 501c3 nonprofit and assuming risk for our performance which would allow us to accept patients from other insurers. It was a long conversation that required us to reflect on how we had evolved and what our mission should be. Next week, I will continue the story with the birth of Harvard Vanguard.
Don’t Confuse Justification With Understanding and Explanation
I usually close my letter each week with some personal note or a comment about the weather. The late fall weather isn’t very note-worthy. My musings often are augmented by listening to podcasts or audiobooks during my walks or bicycle rides. Lately, it’s been too cold for the bike. For most of the last week, I have been walking more. When I can’t go out because of the weather I resort to a Peloton. I miss swimming in the lake. I wish that I could swim during the colder months, but I know from experience that the chlorine in the pool at Colby-Sawyer College here in New London will take my skin off.
Walking gets to be a challenge as we age. I once could run ten miles faster than I can now walk three. I am doing a little better recently after getting some PT and discovering that my foot drop is minimized if I wear boots. I have high hopes based on that new insight. This past week I have been breaking in some new HOKA boots. They are well-cushioned high tops.
Since I can’t swim or ride my bike, I have been walking more. My slow walking pace has given me plenty of time to listen to a lot of podcasts about the Israeli-Hamas conflict in Gaza as I take my daily stroll. Overall, the best commentary has come from the podcast of Ezra Klein of the New York Times. Because of the conflict in Gaza, Klein has come back from a leave that he took to write a book He has interviewed both Israeli and Palestinian intellectuals, academics, and journalists with the objective of explaining and not justifying either the actions taken by Hamas or the response of Israel. Klein’s motivation is the belief that it is important to try to understand the strategic intent behind what Hamas did and to appreciate the intense need of Isreal to respond dramatically to protect the founding hope of their nation that there could be a place on this earth where Jews can live without threat or fear.
Klein has not been the only source of opinion for me. I have been listening to analyses from pundits at The New Yorker, The Atlantic, Vox, and NPR. If you can only invest an hour in one podcast on the subject, I would recommend “A Jew and a Muslim Get Honest about Israel and Gaza” It is a Vox podcast usually hosted by Sean Illing entitled “The Gray Area.” I have listened to this one-hour program twice. The introduction to this week’s podcast says:
Zack Beauchamp, a Vox senior correspondent who writes about democracy and Israel, speaks with Shadi Hamid, a columnist at The Washington Post, research professor of Islamic studies at Fuller Seminary, and author of The Problem of Democracy: America, the Middle East, and the Rise and Fall of an Idea.
Their conversation is amazing and enlightening. The speakers know and respect one another. Despite their friendship, there is occasional tension because Beauchamp is Jewish and frequently reports from Israel, and Hamid is Muslim and writes about the problems of the Palestinian people. Their objective is neither defense nor justification of either side. They both condemn Hamas and understand the need to end its ability to be a threat. Both view the events of October 7 as unjustifiable, and both have concerns about the eventual outcome of the Israeli response. They are focused on the origins of the conflict, and the resolution of a conflict that threatens the stability of the international community. They are very concerned about what might happen when the fighting ends. If you have an hour to spare, I would suggest taking a walk and listening to their conversation.
Wednesday night, after writing much of this letter, I was reading from Frederick Buechner’s daily meditations, Listening to Your Life. I discovered Buechner after his death in 2022 in a remembrance written by David Brooks. The entry for November 15th was entitled “Love.” His words were written more than thirty years ago, and he died long before Hamas invaded Israel on October 7, but I believe his brief piece offers wisdom that could be applicable to the horror that has been experienced on both sides of this ancient conflict even in the face of its recent renewal by the totally unjustifiable actions of Hamas and the international controversial concerns over Israel’s response that has killed or injured so many innocent people..
I hope that presenting these words from Buechner to you will not offend anyone. I doubt that Buechner’s wisdom will appeal at this time to individuals on either side of the current conflict because the feelings on both sides are so raw. I can only hope that in time, probably a very long time, the philosophy behind these words might be the seed from which lasting peace might grow. Buechner writes:
Love—November 15
The love for equals is a human thing—a friend for friend, brother for brother. It is to love what is loving and lovely. The world smiles.
The love for the less fortunate is a beautiful thing—the love for those who suffer, for those who are poor, the sick, the failures, the unlovely. This is compassion, and it touches the heart of the world.
The love for the more fortunate is a rare thing—to love those who succeed where we fail, to rejoice without envy for those who rejoice, the love of the poor for the rich, of the black man for the white man. The world is always bewildered by its saints.
And then there is the love for the enemy—love for the one who does not love you but mocks, threatens, and inflicts pain. The tortured’s love for the torturer. This is God’s love. It conquers the world.
Maybe this philosophy of loving one’s enemy is unrealistic, but embracing pluralism isn’t. In his column for this week, David Brooks has pushed back on the antisemitism that has become increasingly dangerous on many of the campuses of our more elite universities. Brooks argues that the society that we should hope to see evolve is a pluralist society where:
Pluralists seek to replace the demonizing, demeaning and dividing ethos with one that encourages respect, relationships and cooperation. Pluralists believe that people’s identities are complex and shifting, that most human beings shouldn’t be divided into good/evil categories, that we become wise as we enter into many different points of view.
I think that we generally apply concepts of pluralism to individual countries. With all of our deficiencies, our American society is perhaps the most pluralistic. Pluralism is not a religion, but it depends on the best parts of many of the world’s religions and the best expressions of secular humanism. Many pundits see the optimal outcome of the current conflict in Gaza as a two-state solution. It would seem that a one-state solution built on pluralism is a possibility even if those involved can’t go as far as love for their enemies.
Maybe I am moving too fast. Brooks was writing about what is happening on American campuses as a reaction to what happened on and since October 7. He ends his piece with a call that I believe is very similar in its call to Dr. King’s “I Have a Dream” speech. I think the principle requires that we try to respect the humanity of our “enemies” even if we can not love them. Continuing his concern about the climate on campuses and extrapolating the solution to the broader world he ends by writing:
Over the past decades, the crude ideology that’s been marching across American society has taken advantage of the fact that some people like to see the world through Manichaean us/them categories. Now is the time for donors, faculty members, students, parents and everybody else involved in higher education to support the pluralistic counterweight, which actually practices inclusion, celebrates complexity, fosters cooperation and leads to social justice.
The attitude could start on campuses but should continue to the wider world. At the end of the day, it is hard for me to imagine how the Middle East will ever be peaceful until the future of a safe home for Jewish people is guaranteed. For that to happen the Palestinians and Israelis must have the wisdom to understand that permanent peace and an acceptance of the need for coexistence as one state or two states is necessary for their individual freedom and prosperity free of constant concern about the return of horrors similar to what has been experienced on both sides during the past six weeks.
At this moment, those expectations seem like impossible dreams. The tensions in the Middle East have always been far beyond my complete understanding. The problems are rooted in centuries of animosity that all of us should make an effort to understand even as we dream about wisdom creating a better future. In the interim, we must continue to be concerned and involved in the frustrating work of seeking justice. If we collectively allow our country to abandon the problems in Israel and Gaza or withdraw support from the Ukrainian people, I fear that we will live to regret our poor judgment.
Be hopeful,
Be well,
Gene
PS: I hope that you have a great Thanksgiving free of contentious conversations and with a focus on our potential for shared blessings.
