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    State to review merger of Beth Israel, Lahey Health

    The planned merger includes Beth Israel Deaconess Medical Center, Lahey Health, and several other hospitals.
    The planned merger includes Beth Israel Deaconess Medical Center, Lahey Health, and several other hospitals.

    The state’s health care watchdog agency on Tuesday launched a detailed review of a planned merger of Beth Israel Deaconess Medical Center, Lahey Health, and several other hospitals, in perhaps the largest and most complicated hospital transaction ever proposed in Massachusetts.

    The Health Policy Commission will analyze the deal’s effect on health care costs, quality, and access to care.

    The body’s decision to study the merger was widely expected. It kicks off a review that is likely to last several months and raise questions about whether such a significant merger will be good for patients and consumers.


    Leaders of Beth Israel Deaconess and the other hospitals pursuing the merger say they are seeking to create a large but relatively lower-cost health care system that would offer a range of routine and specialty care in from Cape Cod to New Hampshire.

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    They plan to compete against Partners HealthCare, the largest health network in Massachusetts.

    Officials at the Health Policy Commission said Tuesday that the combined new health system would have a market share nearly equal to Partners’ (though its revenues would be less).

    Partners was created in 1994, when Brigham and Women’s and Massachusetts General hospitals merged. It has since grown to include 10 hospitals in the Bay State and one in New Hampshire.

    The Beth Israel Deaconess-Lahey transaction also includes New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, and Anna Jaques Hospital in Newburyport.


    “It’s probably the biggest and most complicated [hospital merger] in the history of Massachusetts,” said Stuart Altman, an economist who chairs the Health Policy Commission. “At every level, it is very substantial.”

    The commission cannot block mergers, but if it finds that a deal would hurt consumers, it can refer those concerns to the Department of Public Health and the attorney general’s office, which have greater regulatory powers.

    Beth Israel Deaconess, Lahey, and the other hospitals said in a joint statement that they welcome the opportunity to show the benefits of their plan.

    “We have a successful track record of expanding coordinated, community-based care at lower costs within our existing systems by strengthening local hospitals and services,” said Nancy J. Sterling, a senior vice president at ML Strategies, which represents the hospitals.

    “We are confident our new system will improve patient care and help contain health care costs for the patients and communities we are privileged to serve.”


    The Health Policy Commission recently studied another transaction, Partners’ bid to acquire the Boston specialty hospital Massachusetts Eye and Ear.

    Its analysis found that the deal would increase health spending as much as $61 million a year by leading to higher prices for Mass. Eye and Ear services.

    Mass. Eye and Ear and Partners have disputed those figures.

    Beth Israel Deaconess and Lahey each operate four hospitals. Beth Israel Deaconess has its flagship medical center in Boston’s Longwood Medical Area. Lahey’s main campus is in Burlington.

    The two organizations announced an initial agreement to merge in January. Several months later, they signed a binding agreement, pending regulatory approvals.

    Their deal would create a network of 11 general hospitals, an orthopedic hospital, and a psychiatric hospital and would include about 4,300 physicians.

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