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One year after merger, Beth Israel Lahey gets good marks from monitor

BOSTON, MA - 1/31/2017: Beth Israel Deaconess Medical Center, Boston  (David L Ryan/Globe Staff Photo) SECTION: BUSINESS TOPIC
BOSTON, MA - 1/31/2017: Beth Israel Deaconess Medical Center, Boston (David L Ryan/Globe Staff Photo) SECTION: BUSINESS TOPICDavid L. Ryan/Globe Staff

Nearly 11 months after their historic merger, the hospitals that make up Beth Israel Lahey Health have started collaborating on a number of programs, and so far they’re meeting all the conditions that Attorney General Maura Healey imposed on them, according to a new report.

Healey’s office allowed the merger of Beth Israel Deaconess Medical Center and Lahey Health system — despite concerns that the deal could raise costs and reduce competition. Her office required the hospitals to adhere to seven years of price constraints, to reach out to low-income patients, and to expand mental health services, among other requirements.

The new Beth Israel Lahey Health system, which launched with a splashy ad campaign in March 2019, also had to hire an independent firm to track its progress for 10 years.

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In its first report on the merger, released Friday, the monitoring firm, Grant Thornton, said it found no evidence that Beth Israel Lahey Health has failed to comply with the attorney general’s stipulations.

“We said we were going to do a whole host of things, and we’re doing them,” Dr. Kevin Tabb, chief executive of the hospital system, said in a recent interview at his new corporate office in Harvard Square. “We’re moving pretty quickly.”

The transaction, which included more than a dozen Massachusetts hospitals, was hotly debated before receiving conditional approval from Healey and the Federal Trade Commission in November 2018.

The Massachusetts Health Policy Commission, a state watchdog agency, said that unchecked, the merger could have allowed the hospitals to demand substantially higher prices for their services, increasing health spending by as much as $230 million a year.

Opponents, including rival hospitals, also warned that the deal could threaten access to care for low-income patients.

Beth Israel and Lahey officials, though, ultimately convinced regulators to allow their deal, arguing that together they could create a high-quality and lower-cost alternative to Partners HealthCare, the state’s dominant health care provider.

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While the full effects of the merger may take years to materialize, Tabb said the hospitals have made strides in sharing expertise, expanding services, and merging operations.

The nonprofit health system has embedded behavioral health providers in nearly 30 primary care practices, ahead of schedule, he said. This means all primary care practices across the system are on track to include behavioral health providers in three years, rather than five.

Pregnant patients at Beth Israel Lahey Health’s community hospitals can now book appointments with visiting maternal-fetal medicine specialists from Boston, Tabb said.

And doctors at New England Baptist Hospital have shared their best practice for orthopedic surgery with surgeons at Beverly Hospital in Beverly and Anna Jaques Hospital in Newburyport, which are all part of the Beth Israel Lahey Health system.

From their new corporate headquarters in Cambridge, executives have started tracking the availability of intensive care beds throughout their system. So if the ICU at one hospital, such as Beth Israel Deaconess Medical Center, is full, patients can be transferred instead to the ICU at Lahey Hospital & Medical Center.

Tabb said the company has been able to keep 100 to 150 patients per month who need intensive care and in the past would have been turned away. “You can’t do that unless you behave as a system,” he said.

The merger has resulted in some changes at the executive level; Tabb has cut some positions and added others. But no big layoffs are planned, and the company is adding to its workforce of about 35,000, he said.

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The Grant Thornton report details some of the changes under way at the company, including marketing campaigns designed to target patients on MassHealth, the state Medicaid program. Currently, MassHealth patients make up a relatively small share of Beth Israel Lahey Health’s business.

“This report reflects that a good monitoring system is in place to keep Beth Israel Lahey Health in compliance with our agreement,” said Meggie Quackenbush, a spokeswoman for the attorney general. “This will be increasingly important as we move forward to ensure that BILH follows through with its commitments to protect health care costs, quality and access to care.”

Sam Richardson, an economist at Boston College, said he’s pleased but not surprised that the hospitals are following the attorney general’s rules.

“My concern is more longer term,” he said. “What happens once they’re no longer being regulated?” Then, he said, Beth Israel Lahey Health could use its market power to demand higher rates from insurance companies, as Partners has done.

Among the critics of the Beth Israel-Lahey merger were executives at Wellforce, a competing health system that includes Tufts Medical Center and community hospitals in Lowell and Melrose. Last year, they warned that the transaction would create a health care duopoly in Massachusetts.

Wellforce officials on Friday said it’s too early to know how the merger will affect the health care market.

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Research on hospital mergers has shown that they generally result in higher prices. A recent Harvard study also found that mergers were associated with worse-quality care.

Dr. J. Michael McWilliams, a professor at Harvard Medical School who worked on the study, said it’s hard to pinpoint whether a specific merger is good or bad for patient care. But on average, he said, his team found “no evidence of hospital mergers improving performance on the measures we studied and some evidence of mergers worsening performance.”

Several months after the launch of Beth Israel Lahey Health, two of Massachusetts’ big three health insurers — Tufts Health Plan and Harvard Pilgrim Health Care — announced their plans to merge.

And Partners, the parent of a dozen hospitals including Massachusetts General and Brigham and Women’s, also unveiled new initiatives. The most immediate: after 25 years, Partners plans to change its name and rebrand as Mass General Brigham.

Tabb said these moves are a validation of the Beth Israel Lahey Health strategy.

“I don’t think that others would be looking at some of those investments and some of those changes if it wasn’t clear that this was a success,” he said.


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