The parent companies of Beth Israel Hospital and New England Deaconess Hospital in Boston last week agreed to form a single new corporation and merge the two tertiary teaching hospitals into a single Beth Israel Deaconess Medical Center.
The memorandum of understanding also sorts out the leadership roles of current top executives and board members of the two prestigious Harvard Medical School affiliates.
The agreement is the result of talks that began in February to explore merger possibilities (Feb. 26, p. 4). Pending a period of "due diligence," the merger is expected to be completed by Oct. 1, the beginning of each company's fiscal year, a Deaconess spokeswoman said.
Deaconess' parent is Pathway Health Network, which has been developing a regional system of hospitals, health centers and physicians since incorporating 18 months ago. The Pathway name will be discontinued and replaced by a new identity for the merged organizations, the Deaconess spokeswoman said.
Mitchell Rabkin, M.D., president of Beth Israel, will be chief executive officer of the new parent company, while Richard Gaintner, M.D., president of Pathway, will hold the same title in the unnamed new organization.
The agreement calls for equal representation on the new parent board, but a majority of the new hospital board will be selected by Beth Israel, and that hospital's current executive vice president, David Dolins, will become president of the new medical center.
Rabkin said the deal recognizes that Beth Israel is twice the size of Deaconess and has twice the dollar volume. Collectively, the new corporation will have annual revenues of more than $1 billion, he said.
That figure includes revenues from Mount Auburn Hospital in Boston, which is close to joining the merger but hasn't reached a formal memorandum of understanding, Rabkin said.
He said the merger will combine tertiary and academic operations with complementary strengths-community-based facilities at Pathway and primary-care concentration at Beth Israel.
The Pathway network includes New England Baptist Hospital in Boston; Deaconess-Glover Hospital in Needham, Mass.; Deaconess-Nashoba Hospital in Ayer, Mass.; and Deaconess-Waltham Hospital in Waltham, Mass.