Lahey-Winchester hospital deal clears hurdle

Lahey Health moved closer to acquiring Winchester Hospital after a state board Thursday agreed the deal would help control health care costs.

The Health Policy Commission voted unanimously to approve a final report that found the deal could save up to $2.7 million a year from lower physician prices and more patients moving from higher-priced Boston hospitals to Lahey facilities.


“We intend to monitor how this market works out,” said Stuart Altman, chairman of the commission. “What parties say and what they do may not turn out to be the same . . . If it turns out that our analysis was a little too optimistic, we eventually may go back to the Legislature for more authority.”

The commission does not have the power to block mergers but can refer to the attorney general’s office deals that it believes are bad for consumers.

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That was the case with Partners HealthCare’s controversial bid to buy South Shore Hospital in Weymouth. The Health Policy Commission said the deal would add tens of millions to health care costs and asked Attorney General Martha Coakley to investigate.

Coakley’s office announced on Monday a settlement with Partners, the largest health system and largest private employer in the state, that sets limits on what prices Partners can charge and what organizations it can acquire in the future.

Commissioners were far friendlier to Lahey Health, issuing a preliminary report favoring the Winchester acquisition in April, and finalizing that report Thursday, after reviewing more information from both organizations.


Lahey operates a teaching hospital in Burlington — where it plans to build a $76 million emergency department — and community hospitals in Peabody, Beverly, and Gloucester. Winchester, which has 229 beds, will be the closest facility to the main hospital in Burlington.

Dr. Howard Grant, Lahey Health’s chief executive, called the commission’s report “a vote of confidence.”

“We believe the Health Policy Commission recognizes that Lahey Health and Winchester Hospital have a demonstrated plan and commitment to the communities that we serve,” Grant said. “We are absolutely confident that we’re going to be successful with the plan we have in place.”

Lahey is not planning any job cuts from the merger, Grant added.

The Health Policy Commission did not determine whether the deal will improve care delivery, noting in its report that Lahey and Winchester already have “strong overall quality performance.” The deal is expected to close by July 1.

Commissioners spent more time at their meeting Thursday discussing Partners than Lahey, after commission member Dr. Paul Hattis, a Tufts University School of Medicine professor, suggested inviting representatives of Partners and Coakley’s office to appear before them. He said he wanted the commission to hear more details about the tentative settlement — and offer modifications — before the agreement goes to a judge.

Commissioners did not vote on Hattis’s suggestion, but Altman said they should consider it, including what they legally can request of Coakley’s office.

The Health Policy Commission is a young agency, created from a 2012 state law aimed at controlling health care costs.

“We are in uncharted waters,” executive director David Seltz said.

Priyanka Dayal McCluskey can be reached at Follow her on Twitter @priyanka_dayal.
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