It was a risky idea hatched in a hurry: two historic Boston hospitals would join and form a streamlined health care system.
But the 1996 merger of Beth Israel and New England Deaconess hospitals immediately ran into problems: Rivalries lingered, doctors left, donations fell, and financial losses grew. The damage took years to undo.
More than two decades later, the result of that rocky union, Beth Israel Deaconess Medical Center, is trying to heed the lessons learned from that experience as it plans a new merger, this time with Lahey Health. It is one of the biggest health care deals ever proposed in Massachusetts, with almost 30,000 employees and more than a dozen individual hospitals involved.
Hospital leaders say they’re aware of the potential pitfalls, and they’ve been working to limit the anxiety and disruption inevitable with such a big change.
“Cultural differences can be either the downfall of a merger — or, if you embrace them, can really be to the benefit of all,” said Dr. Kevin Tabb, chief executive of Beth Israel Deaconess Medical Center, which evolved from that shaky start in 1996 to become a profitable and reputable Harvard-affiliated health care provider.
The proposed merger of Beth Israel Deaconess and Lahey is very different from the earlier deal. The health systems are based about 20 miles apart — in Boston and Burlington, respectively — rather than across the street from each other. And, critically, their merger is not coming as a surprise. Executives negotiated on and off for years before unveiling their plans in January 2017.
New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, and Anna Jaques Hospital in Newburyport also joined the merger last year. The deal received one key state approval in April, and other state and federal approvals are pending.
Many aspects of the Beth Israel Deaconess-Lahey merger are unknown, including how much the systems will combine operations and how that will affect patients. Post-merger, there could be conflicts between the hospitals and their staffs that no one has foreseen.
But the two hospital companies are taking steps now to bridge the differences in their corporate cultures and to reduce worry about the merger.
Executives and hundreds of other staff from the hospitals are holding frequent “integration planning” meetings. This includes doctors and nurses, as well as corporate employees in departments such as finance and legal.
Beth Israel Deaconess and Lahey already have agreed to make Tabb the chief executive of their new company — to be called Beth Israel Lahey Health — avoiding a potential leadership fight. The two health systems will have equal numbers of seats on the board of the company. But over time, the board will try to eliminate those factions; board members will not be required to come from any particular hospital.
“The idea is not to set up multiple hospitals that compete with each other,” Tabb said. “The idea is not to set up duplicative warring executive teams.”
Groups of physicians from the merging hospitals have been gathering for monthly social hours and education sessions. It’s an opportunity to meet future colleagues and learn about their work.
“It’s mainly been [about] ‘how do we get the physician staffs to get to know each other?’ ” said Dr. Stan Lewis, chief system development and strategy officer at Beth Israel Deaconess.
After the Deaconess merger of 1996, dozens of doctors, including surgeons and anesthesiologists, left because they were unhappy working at the new center.
“It was clear in retrospect, certainly, that the complexity and the challenges involved in that [merger] were significantly underestimated,” Lewis said. “We have learned from that.”
For the most part, Beth Israel Deaconess and Lahey treat patients in different parts of Eastern Massachusetts: Lahey has a greater presence north of Boston, while Beth Israel Deaconess stretches to the south. Because the systems have different service areas, there won’t be as many opportunities “to smash together two departments into one location,” said Dr. Richard W. Nesto, Lahey’s chief medical officer. In theory, this means less potential friction between doctors at the merging hospitals.
“There may be occasional cultural missteps in this,” Nesto said, “but we’re doing so much pre-work, that will limit any damage.”
Beth Israel Deaconess and Lahey do seem to have much in common. Both have flagship medical centers and a network of community hospitals. Both are considered high-quality, and they have lower costs compared with the region’s largest hospital network, Partners HealthCare. On their own, both have struggled to compete with Partners, which includes the renowned Massachusetts General and Brigham and Women’s hospitals.
“There’s a decent amount of compatibility and similarity,” said David E. Williams, president of Health Business Group, a Boston consulting firm. “BI and Lahey spent a lot of time getting to know one another and making sure that this is a good fit.”
But the health systems have different roots.
The institution long known as the Lahey Clinic began in 1923 in Boston’s Kenmore Square. Dr. Frank Lahey, who founded the clinic, brought different medical specialties together in his practice, which at the time was an unusual idea.
Lahey, who served in the military, had such a national reputation that he was asked to examine President Franklin D. Roosevelt in 1944. Although he initially hid this from the public, Lahey wrote in a memo that he did not expect the sick president to survive another term. (He was right).
Lahey Clinic left Boston and moved to a new, larger location in Burlington in the 1980s, and it remains a mostly suburban health care provider. The clinic is now called Lahey Hospital and Medical Center. Its parent company, Lahey Health, includes hospitals in Beverly, Gloucester, and Winchester. The Lahey system employs about 14,500 people.
The leadership structure at Lahey Hospital means physicians essentially run the facility. Unlike many of its peers, the physician group at Lahey came before the hospital. This is still integral to the culture, said Dr. Howard Grant, the health system’s chief executive.
“We’re a large physician group practice that happens to have a hospital as part of its organization,” Grant said.
Beth Israel Deaconess Medical Center began in Boston and remains based there. New England Deaconess Hospital came first, in 1896, with 14 beds in a modest brownstone. One of its founding principles was “Christian kindness.” Beth Israel Hospital opened in 1916, serving a growing population of Jewish immigrants and anyone else who walked in the doors.
Over time, Beth Israel became known for a particular focus on patients, issuing a patient bill of rights in 1972.
“It basically said you have the right to be treated with dignity and respect,” said Dr. Mitchell T. Rabkin, a former longtime chief executive of the hospital. “If you don’t think you’re getting it . . . we will respond.”
The 1996 merger with Deaconess was a response at least in part to the 1994 union of Mass. General and Brigham and Women’s, which created Partners.
The current merger, too, is at least partially a response to Partners, which has grown to include a dozen hospitals. Leaders of Beth Israel Deaconess and Lahey say they hope to grow by attracting patients from other more expensive hospitals, including those run by Partners.
Beth Israel Deaconess is affiliated with Harvard Medical School, while Lahey partners with Tufts University School of Medicine.
Both health systems provide care in many specialties. Beth Israel Deaconess is known for maternity and women’s health, among other areas. Patients come to Lahey for complex surgeries such as liver transplants.
Despite the differences, Ann-Ellen Hornidge, a partner at the law firm Mintz Levin in Boston and chair of the Lahey Health board, said she feels confident because hospital leaders have spent so much time planning the merger — and trying to avoid repeating mistakes of the past.
“Everybody is comfortable we have a completely different model here,” said Hornidge, who will chair the merged company’s board.
“We’ve been really thoughtful and deliberate in the planning,” she said. “Will things go wrong? Will we make mistakes? Yeah, that’s always going to happen. I’m really optimistic that we have a new model that we haven’t seen yet in Massachusetts, and it will be good for patients.”Priyanka Dayal McCluskey can be reached at email@example.com. Follow her on Twitter @priyanka_dayal.