Beth Israel, Lahey call off merger talks

Hospital systems at impasse

Beth Israel Deaconess Medical Center (pictured) and Lahey Health have reached an impasse in discussions to join forces.David L. Ryan/Globe Staff/File 2000/Boston Globe

The on-again, off-again merger talks between Beth Israel Deaconess Medical Center and Lahey Health are off again.

For the third time in the past four years, the two Massachusetts hospital systems have reached an impasse in discussions to join forces, said two people familiar with the development.

A combined organization would be another medical colossus, rivaling the state’s dominant hospital and physicians network, Partners HealthCare, in size and market clout. But negotiators for Lahey and Beth Israel Deaconess failed to bridge their differences, according to the two people. They spoke on condition of anonymity because they weren’t authorized to discuss the talks.

The parties couldn’t agree on how to share the leadership of a combined system and how to manage physicians groups from the two systems under a single umbrella, according to one of the people familiar with the talks. Those were among the issues that had tripped up earlier rounds of merger talks in 2011 and 2014 between Burlington-based Lahey and Beth Israel Deaconess, which is based in Boston’s Longwood Medical Area.

Representatives from Beth Israel Deaconess and Lahey issued prepared statements indicating they remain open to health care alliances but wouldn’t comment on specific talks.

While they weren’t able to resolve the issues, leaders of the two health systems continue to believe there is a strong business rationale for the merger, so it is possible they could reenter negotiations down the road, according to the people familiar with their thinking.

Beth Israel Deaconess, a Harvard-affiliated teaching hospital, has expanded its network by acquiring community hospitals in Needham, Milton, and Plymouth. Lahey, an affiliate of Tufts Medical School, has added hospitals in Beverly, Gloucester, and Winchester to its flagship Lahey Hospital and Medical Center in Burlington. Together, they would have more than 27,000 employees.

Health care analysts have predicted that changes in the industry, driven by new laws and increased pressure from government and insurers to control costs, will lead to mergers and consolidation in the industry. But Boston hospitals have been unable to pull them off recently.

In May, Boston Medical Center and Tufts Medical Center scrapped merger talks over differences in culture and strategy. In February, Partners ended its pursuit of South Shore Hospital in Weymouth following the state judge’s rejection of a merger plan and threatened antitrust action by Attorney General Maura Healey.