Business & Tech

Beth Israel and Lahey Health sign final agreement to merge

Beth Israel Deaconess Medical Center.

David L Ryan/Globe Staff

Beth Israel Deaconess Medical Center.

After several months of negotiations, the Beth Israel Deaconess health system, Lahey Health, and three other hospitals said they’ve signed a final agreement to merge.

The merger would be the biggest Massachusetts hospital deal in decades. It is still subject to regulatory reviews.

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Beth Israel Deaconess of Boston and Burlington-based Lahey announced their initial merger plans in January. New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, and Anna Jaques Hospital in Newburyport later signed onto the deal.

On Thursday, the hospitals said they have signed a legally binding agreement to merge, the final step before they file with state and federal regulators.

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The hospitals are seeking to create a large, lower-cost health network that can compete with Partners HealthCare, the parent company of Massachusetts General and Brigham and Women’s hospitals.

Beth Israel Deaconess and Lahey have engaged in merger talks in the past, only to see them fall apart. This time, the organizations said, they are ready to move forward.

“Together, we will improve patient care, help contain rising health care costs, and better position our member hospitals in a rapidly changing health care environment,” Dr. Kevin Tabb, chief executive of Beth Israel Deaconess, said in a statement. Tabb is slated to run the new combined health system.

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The merger will create a network of 11 general hospitals across 12 campuses and one psychiatric hospital, as well as more than 800 primary care physicians and 3,500 specialists.

The hospitals will keep their names and governing boards but will be combined under a new parent company.

The deal will be reviewed by the state Health Policy Commission, which studies the effect of hospital mergers on health care costs, quality, and access.

Commission chairman Stuart Altman said the agency “will objectively review the proposed transaction for its potential impact, both positive and negative.”

“This transaction involves some of the biggest and most well-established health systems in the Commonwealth,” Altman said in a statement. “It represents the most significant change in the structure of the Massachusetts health care market in more than 20 years, and it will further consolidate our health care market into a small number of major systems and a declining number of independent community hospitals.”

The Beth Israel Deaconess-Lahey transaction would be the biggest hospital merger in Massachusetts since Mass. General and Brigham merged to create Partners HealthCare in 1994.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.
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