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Panel suggests savings in union of Winchester Hospital, Lahey

The state Health Policy Commission unanimously approved a preliminary staff report Wednesday finding that Lahey Health’s proposed acquisition of Winchester Hospital could lower health spending if Winchester referrals of patients needing more complex care are redirected to the Lahey Hospital & Medical Center from more expensive Boston teaching hospitals.

Looking at reimbursement patterns from the state’s four largest commercial health plans, the staff report projected savings of as much as $2.7 million a year from “potential decreases in [Winchester] physician prices and shifts in utilization from higher-priced hospitals” to Lahey.

Lahey chief executive Howard R. Grant called the tone at the commission’s meeting Wednesday “very supportive” of what he said was a commitment by Lahey and Winchester to affordable health care. Grant said that could also involve shifting some patients from Lahey Hospital to Winchester Hospital if that proved to be a more appropriate care setting.

But the commission, charged with reining in health costs, asked the would-be merger partners to address two concerns outlined by the commission staff over the coming month before it votes on a final report May 22.


One was that an alliance of the two financially strong competitors, which now charge mid-range prices, could enable the merged institution over time to boost prices by extracting higher payments from health insurers. The other was that medical spending could increase if Burlington-based Lahey tacks on facility fees to Winchester’s service bills. Such fees are sometimes added when care is given at hospital settings rather than at freestanding doctors’ offices.

Grant said there are no plans to add facility fees or raise prices at Winchester Hospital.

“Our past actions are indicative of the way we’re going to do business,” Grant said, citing what he said was moderately priced care at Beverly Hospital and Addison Gilbert Hospital in Gloucester, which Lahey acquired in 2011. “We think that the commission recognized that we want to deliver good care in the community. We think our model of affordable care close to home is what was contemplated” by the state’s 2012 cost containment law.


The commission does not have the authority to block health care mergers and acquisitions outright. But it can refer proposed affiliations to the state attorney general’s office.

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @ GlobeRobW.