Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Custom Media Event: ESG Summit
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Virtual Health
    • - Future of Healthcare Staffing
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Providers
July 18, 2018 01:00 AM

Beth Israel-Lahey merger could raise healthcare spending

Alex Kacik
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    (Updated July 19)

    Massachusetts healthcare spending would increase by up to $251 million per year if regulators approve the planned merger between Beth Israel Deaconess Medical Center, Lahey Health and several other hospital systems to create the second-largest healthcare network in the state, according to a preliminary report from the Massachusetts Health Policy Commission.

    The deal involves Beth Israel in Boston and Lahey in Burlington, as well as Boston's New England Baptist Hospital, Mount Auburn Hospital in Cambridge and Anna Jaques Hospital in Newburyport.

    The combination would put the new system behind Partners HealthCare and its nearly $14 billion in total revenue in 2017. The combined entity would have a network of 10 hospitals, the largest in the state. It would also have three affiliate hospitals in Cambridge Health Alliance, Lawrence General Hospital and Metrowest Medical Center and more than 4,000 physicians.

    The Beth Israel-Lahey merger would increase its bargaining leverage with commercial payers and potentially allow it to boost prices around 5% to 10%, increasing spending by an estimated $138.3 million to $191.3 million annually for inpatient, outpatient and adult primary care services. Specialty physician services spending could increase by an additional $29.8 million to $59.7 million. These conservative price hike estimates modeled after insurers' willingness to pay higher prices would still result in lower prices than Partners, the commission found.

    Notably, although this is one of the most complicated mergers in the country because so many parties are involved, both Beth Israel and Lahey have maintained low to moderate prices relative to the Massachusetts market as they've grown. They haven't excessively raised prices after past mergers and acquisitions, researchers found.

    "There is a competition between delivering a vision of new care, which I hope will be offered, and the simple opportunity to take advantage of price leverage here," Commissioner Dr. Donald Berwick said during a discussion of the preliminary report. "Everyone wishes they had Partners' prices. This is a chance for this entity to go for Partners' prices and that is not going to help anyone at all."

    The elephant in the room is what would Partners do if the deal is approved or it falls through, Berwick added.

    The merger would not materially change the combined entity's payer mix, which already caters to a higher-income bracket. The health systems have a lower inpatient Medicaid, minority and lower-income payer mix compared to their peers, the report said.

    The hospitals now have 30 days to address the commission's concerns before the final report is published.

    The discussion illustrates the power struggle between Partners HealthCare, the largest health system in the state, and other providers in Massachusetts trying to capture more market share. On one hand, the Beth Israel and Lahey combination could lower Partners' prices if it broadens the payer network that Partners is in. A more competitive network could ultimately lower spending.

    But even if Beth Israel and Lahey are able to save money by shifting care from high-cost providers, expanding its patient base, better coordinating patient data and sharing best practices, and combining purchasing and administrative services, among other purported efficiencies, that would not offset the projected higher prices it could garner from more market share, the commission said.

    This conversation is taking place throughout the country as providers grow.

    "I am at a loss for what are the things that could happen together that couldn't happen separately," said David Cutler, the commission's market oversight and transparency committee chair and a Harvard professor.

    Massachusetts employers and consumers are eager to change the healthcare delivery dynamics in the state, which is known for overusing its academic medical centers. Medicare beneficiaries in Massachusetts visited a hospital outpatient setting for routine office visits at more than twice the national rate, resulting in roughly double the cost when compared to the U.S., according to the commission.

    The Make Healthcare Affordable Coalition, which includes 60 community leaders across Eastern Massachusetts, opposed the merger.

    "This report confirms our worst fears, that the merger will leave communities of color behind in order to generate bigger profits," said Hanoi Reyes, spokeswoman for the coalition.

    The Massachusetts' attorney general also warned that the deal could raise healthcare costs and impede access.

    The Department of Public Health will review the deal, taking the commission's findings into consideration. The Public Health Council said it could change its approval pending the commission's report when the council approved the merger in April.

    Correction: An earlier version of this story misattributed remarks to another member of the commission. This error has been corrected.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Supporting a truly diverse C-suite
    Supporting a truly diverse C-suite
    For top healthcare execs, leadership shapes legacy
    For top healthcare execs, leadership shapes legacy
    Sponsored Content
    Modern Healthcare A.M. Newsletter: Sign up to receive a comprehensive weekday morning newsletter designed for busy healthcare executives who need the latest and most important healthcare news and analysis.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Transformation Summit
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Virtual Health
        • - Future of Healthcare Staffing
      • Custom Media Event: ESG Summit
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing