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
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • 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
    • Women in Healthcare
    • - Luminaries
    • - Top 25 Diversity Leaders
    • - Leaders to Watch
    • - Luminaries
    • - Top 25 Women Leaders
    • - Women to Watch
  • Events
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Custom Media Event: ESG Summit
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Leadership Symposium
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Diversity Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Strategic Marketing
    • - Virtual Health
  • Listen
    • Podcast - Next Up
    • 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. Mergers & Acquisitions
March 01, 2019 01:49 PM

Beth Israel Deaconess and Lahey Health complete merger

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

    Beth Israel Deaconess Medical Center and Lahey Health officially combined to form Beth Israel Lahey Health, the second-largest health system in Massachusetts, the organizations announced Friday.

    In November, Massachusetts' attorney general approved the deal with conditions including a seven-year price cap; participation in MassHealth, the state's combined Medicaid and Children's Health Insurance Program; and $71.6 million in investments supporting healthcare services for low-income and underserved communities in Massachusetts.

    The price cap guarantees Beth Israel Lahey Health's price increases will remain below the state's annual healthcare cost growth benchmark of 3.1% for seven years. That will prevent more than $1 billion of the potential cost increases over a seven-year span projected by the Massachusetts Health Policy Commission, according to Attorney General Maura Healey.

    Healey's assurance of discontinuance does offer some flexibility amid "significant change in market conditions," including significant swings in the consumer price index or new laws that significantly raise the cost of care.

    The Massachusetts Health Policy Commission, which has produced critical reports of the merger citing a potential to increase healthcare costs by up to $251 million per year, said it commends the conditions the attorney general placed on the deal that would help mitigate its concerns. They will have a real impact on access to treatment for mental health and substance-use disorders for patients across eastern Massachusetts, the commission said.

    These types of regulations could become the new normal for hospital merger and pricing policy in the U.S., policy experts said.

    Between the Massachusetts Health Policy Commission and strong attorney general, Massachusetts has been fairly far out in front in terms of healthcare policy, said Zack Cooper, associate professor of health policy and economics at Yale University.

    "What they are signaling with this settlement is that they will allow these sort of entities, conditional upon enforcing price regulation," he said. "This is the de facto price and spending cap may become the norm in the next decade or so. Frankly, we face a choice of using a public option to put pressure on providers and insurers or simply regulate directly."

    The industry is moving toward these types of monopolies that require price regulation, Cooper said. The challenge will be whether to regulate prices over the entire systems or only the overlapping sites. With the latter, the evidence shows that systems tend to shift the price increases to other sites in the system, he said.

    "Capping prices for the entire system is a notable outcome of this ruling," Cooper said.

    The merger includes 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.

    Beth Israel Lahey Health operates a total of 10 hospitals as well as three affiliate hospitals in Cambridge Health Alliance, Lawrence General Hospital and Metrowest Medical Center.

    Its network includes four academic and teaching hospitals with affiliations with Harvard Medical School and Tufts University School of Medicine, eight community hospitals, specialty hospitals for orthopedics and behavioral health, and ambulatory and urgent care centers. It has a population health enterprise and a centralized network of administrative and operational services, executives said.

    "Through local and system partnerships, as well as the enthusiasm and talent of all our employees and providers, we will invest in and strengthen community-based care, informed by innovation and discovery," Dr. Kevin Tabb, president and CEO of Beth Israel Lahey Health, said in prepared remarks.

    The combined entity would have around $6 billion of revenue, more than 4,000 physicians and 35,000 employees.

    Beth Israel and Lahey executives argued that their combination is necessary to heal a dysfunctional Massachusetts healthcare market that continues to overuse hospitals and academic medical centers. It's the only way to check Partners, they said. Executives said they plan to expand the state's now-limited behavioral health service network, helping divert patients from costly emergency departments. They pledged to use their combined purchasing power and expertise to lower costs, which they say will outpace any potential price increases.

    Lahey Health narrowed its operating loss in 2018, but its expenses related to salaries and wages and supplies continued to rise. It reported a $29.6 million operating loss on revenue of $2.15 billion in 2018, compared to a $65.6 million operating loss on $2.03 billion in revenue in 2017.

    CareGroup, which is the corporate parent of Beth Israel Deaconess, New England Baptist Hospital and Mount Auburn Hospital, reported $38.7 million of operating income on revenue of $3.53 billion in 2018, a significant increase from a $3.1 million operating loss on $3.33 billion of revenue in 2017.

    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
    broken merger
    FTC opposition ends another hospital deal
    RWJBarnabas Health
    RWJBarnabas scraps deal to acquire St. Peter's
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    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
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • 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
    • Events
      • Conferences
        • Transformation Summit
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Leadership Symposium
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Diversity Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Strategic Marketing
        • - Virtual Health
      • Webinars
      • Custom Media Event: ESG Summit
    • Listen
      • Podcast - Next Up
      • 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