Beth Israel-Lahey merger takes another key step forward
One of the biggest health care mergers proposed in Massachusetts is closer than ever to becoming a reality.
Massachusetts public health officials on Wednesday approved the combination of Beth Israel Deaconess Medical Center, Lahey Health, and several other hospitals. The merger would create a sizable new health system, with doctors and hospitals spanning from the New Hampshire border to Cape Cod.
The endorsement by the state Public Health Council, a body chaired by Governor Charlie Baker’s public health commissioner, marks a significant step in the proposed 13-hospital deal.
At least two hurdles remain. The state Health Policy Commission, which studies such transactions, has not finished reviewing the merger’s impact on health care costs. And Attorney General Maura Healey has yet to weigh in on how the deal would affect Massachusetts consumers.
Still, executives are upbeat that a deal discussed many times over the years is finally moving forward.
“I feel very good and energized,” Dr. Kevin Tabb, chief executive of Beth Israel Deaconess, said in an interview this week. “I think there’s a general recognition that this makes sense, that this is long overdue in this market, and that ultimately it will be good . . . first and foremost for patients.”
Tabb is set to become CEO of the new merged company.
The merger would join together Beth Israel Deaconess in Boston and its community hospitals, and Lahey Health of Burlington and its community hospitals. Also included in the deal are New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge, Anna Jaques Hospital in Newburyport, and about 4,300 physicians.
The new company would compete with the state’s most dominant health care system, Partners HealthCare, which is the parent of Massachusetts General, Brigham and Women’s, and several other hospitals.
The new system would generate revenue of more than $5 billion annually, less than half of Partners’ annual revenue of more than $13 billion. But the two organizations each would treat a similar share of patients, according to state data.
Some citizen groups have raised concerns that the Beth Israel Deaconess-Lahey merger may lead to higher health care costs and reduced access to affordable care. At a public meeting Wednesday, representatives from the Greater Boston Interfaith Organization, a group that follows health care affordability issues, said they were disappointed that public health department staff weakened the original language of a condition that requires the merging hospitals to control their spending.
If the merger fails to control health care costs, “the Massachusetts citizens lose out,” GBIO representative Bonny Gilbert told the Public Health Council.
Members of the council, composed of doctors and other health care experts, questioned the hospital executives about their commitment to keeping medical care in community settings, controlling costs, engaging employees, and creating a diverse governing board.
Asked how the merger would affect services in far-flung communities like Gloucester, where Lahey owns a hospital, Lahey’s chief executive, Dr. Howard Grant, said, “I’ve never envisioned a scenario where we wouldn’t want to maintain those services.”
Studies have shown that hospital mergers tend to lead to higher prices for medical care, meaning consumers, employers, and insurers must pay more. Executives of Beth Israel Deaconess and Lahey, however, argue that they will offer a high-quality and relatively lower-cost health care option that can draw patients away from more expensive providers, such as doctors and hospitals in the Partners network.
“Your goals are laudable,” said Dr. Alan Woodward, a member of the Public Health Council. “We hope that you can achieve them.”
The council’s vote of support was expected, as Department of Public Health staff last month recommended approval of the merger.
The Health Policy Commission, a separate agency, is expected to issue a cost report on the deal in the coming months. The commission does not have the power to block a merger, but if it identifies cost concerns, it can pass them along to the attorney general, who can intervene.
Also, public health officials could reconsider or amend their endorsement of the deal, depending on the findings in the cost report.
Tabb stopped short of promising that prices would not rise at all as a result of the merger. But, he told the Globe after the meeting Wednesday that the deal is “not predicated on price increases.”
“It won’t be possible to be successful as a system — to be attractive to a larger number of patients, to be attractive to major payers as they develop narrow-network products, to be attractive to large employers — unless we actually do what we say we’re going to do,” Tabb said.
Executives hope to complete the transaction this fall, pending approvals.