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Healey raises concern about Beth Israel, Lahey merger

Lane Turner/Globe Staff
Maura Healey said the proposed merger has the potential to destabilize independent hospitals, particularly those in lower-income communities, by drawing patients away from them.

Attorney General Maura Healey is raising concerns about the planned merger of Beth Israel Deaconess Medical Center and Lahey Health, a sign she may press for changes to the blockbuster deal.

In a letter to the state’s health care watchdog agency, the attorney general said the hospital combination could increase health care costs and threaten access to care.

Healey did not indicate whether she would take any legal action to try to block the merger. But her comments mark the first time a state official has sounded such a warning.

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The deal would be the state’s largest health care transaction in decades, bringing together more than a dozen hospitals to create a new health system stretching across Eastern Massachusetts.

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Healey said the merger has the potential to destabilize independent hospitals, particularly those in lower-income communities, by drawing patients away from them. This could force community hospitals to cut services and jobs, she said.

“People who continue to rely on those hospitals . . . could face obstacles to accessing care,” Healey said in the letter, which was sent to the state Health Policy Commission on Monday.

Nationally, health care prices tend to rise after hospital mergers, and the same dynamic could happen here because Beth Israel Deaconess and Lahey are already more expensive than many of their competitors, according to Healey.

The commission does not have the power to block a merger, but it can share its findings with the attorney general, who has much more authority.

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Another regulatory board, the state Public Health Council, approved the transaction in April, but final state approval rests with Healey. Federal authorities are also reviewing the deal.

Officials in the attorney general’s office said they plan to discuss their concerns with senior executives from Beth Israel Deaconess and Lahey in the coming weeks. They could seek to broker a settlement with hospital leaders that includes certain limits on the merger or requires the hospitals to make certain commitments around pricing or patient mix.

Healey’s comments — which echo concerns raised by opponents to the merger — come as the Health Policy Commission finalizes a lengthy analysis of the deal. The report, due July 18, is expected to detail how the merger would affect health care costs, quality, and access. The hospitals will have 30 days to respond before the report is finalized.

“Other interested parties may submit any comment to the HPC during that time period as well,” commission spokesman Matthew Kitsos said in an e-mail.

The proposed merger would include all the hospitals in the Beth Israel Deaconess and Lahey systems, as well as New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, and Anna Jaques Hospital in Newburyport. It would be the second-largest health system in Massachusetts behind Partners HealthCare, the parent company of Massachusetts General, Brigham and Women’s, and several other hospitals.

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The new system — to be called Beth Israel Lahey Health — would treat a similar share of patients as Partners, according to state data. It would have revenue of more than $5 billion annually, less than Partners’ annual revenue of more than $13 billion.

Leaders of Beth Israel Deaconess and Lahey say their merger would create a high-quality new health system that would help contain costs by attracting patients from more expensive health care providers, such as Partners.

“We are committed to enhancing our ability to provide high-quality, lower cost health care to all communities, patients, and families throughout Eastern Massachusetts,” David Passafaro, a spokesman for the merging hospitals, said in an e-mail. “We have been engaged in an ongoing discussion with the attorney general’s office as part of a robust regulatory review process. Over the next few months, we will continue to work collaboratively with all regulatory agencies — including the attorney general’s office.”

The merger is opposed by Wellforce, the parent of Tufts Medical Center and other local hospitals, and Steward Health Care System, the for-profit company that runs nine Massachusetts hospitals. Both companies compete with Beth Israel Deaconess and Lahey. The deal also has been criticized by 1199SEIU, an arm of the Service Employees International Union that represents health care workers, and the Make Healthcare Affordable Coalition, which represents community members and is backed by consulting firm Northwind Strategies. A spokeswoman for the group on Tuesday applauded the attorney general “for clearly identifying the negative effects” of the “mega merger.”

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