Partners affiliates with Neighborhood Health Plan

The buyer: Partners Healthcare System, based in Boston

The acquired: Neighborhood Health Plan, based in Boston

The price: No money would change hands under the deal, but Partners would contribute an unspecified sum to provide grants to more than 50 community health centers affiliated with Neighborhood Health.

The timeline: Deal announced Aug. 11, 2011; currently in due diligence, awaiting state and federal regulators' approval

The scoop: Partners, the largest hospital and physician network in Massachusetts, acquired Boston-based nonprofit insurer Neighborhood Health Plan, which has more than 240,000 mostly low-income members. Under the letter of intent to bring the payer and provider together, Neighborhood Health would become a member of Partners.

"We both believe that combining the experience and expertise of our organizations will result in a stronger patient experience and address growing needs for care coordination and management, health equity, and the ability to help curb healthcare costs," Partners CEO Gary Gottlieb said in an Aug. 11 statement. "Working together, our organizations will have the flexibility to develop innovative patient and family centered models of care and craft new initiatives aimed at better managing care of complex conditions."

Although the affiliation allows Partners to expand into the private insurance market and compete with other insurers, Gottlieb said it isn't trying to compete with large insurers in the private market. Neighborhood Health does very small commercial business, and many of its members seek medical care at safety-net hospitals that frequently serve low-income residents. "We don't want to change the pathway of patients," Gottlieb said. "We want patients to get the care where they want to get it." Instead, Partners would work with Neighborhood Health and health centers to provide better medical care more efficiently to the urban poor in Boston and other nearby areas.

Despite the potential blurring of payer-provider lines, the deal wouldn't trigger exclusive contracts between Neighborhood Health and Partners providers. "There is nothing inherent in this affiliation that would affect our relationships with other providers," Neighborhood Health Plan CEO Deborah Enos said in an Aug. 10 Boston Business Journal article.

The deal makes Partners the parent of Neighborhood Health and reconfigures the payer's board to include a majority of members from Partners and a minority of members representing community health centers. Enos would remain both the CEO and a board member.

The Massachusetts attorney general and division of insurance, as well as the U.S. Department of Justice, still must approve the deal's terms. State regulators, in particular, might scrutinize the acquisition because Partners' teaching hospitals have been cited for using their market power to command higher prices for medical care than smaller hospitals.