Massachusetts attorney general raises concerns over Beth Israel Deaconess, Lahey mega-merger

Just a few months after Massachusetts put its official stamp of approval on a proposed mega-merger between Beth Israel Deaconess Medical Center and Lahey Health, the state's attorney general has raised concerns that the deal could hinder access to care, push healthcare costs up, and jeopardize the vitality of independent hospitals in the region.

In late April, the Massachusetts Public Health Council voted unanimously to approve the merger, which includes all Beth Israel Deaconess locations, Lahey Health, New England Baptist Hospital in Boston, Mount Auburn Hospital in Cambridge and Anna Jaques Hospital in Newburyport. The proposed new system would be the second largest in Massachusetts, behind Partners Healthcare, which includes Massachusetts General Hospital, Brigham and Women's and numerous other facilities.

This is the first time the AG has raised concerns about the proposed merger. In particular, Attorney General Maura Healey noted that independent hospitals in the region that are not included in the deal are reimbursed at lower rates from commercial insurance carriers and large portions of their payer mixes include public insurance through Medicare or MassHealth.

She expressed concern that, should the deal go through, independent facilities could lose crucial commercially-insured patients to the new system, a system whose providers already see fewer MassHealth patients than other hospitals. 

"Because the BI-Lahey providers are higher priced than these other hospitals, such a shift in patient population would increase aggregate health care expenditures. And because public payers traditionally pay less than commercial insurance, such a shift would disproportionately reduce revenue to affected hospitals, potentially undermining the financial stability of some of them. There could be cascading effects on patients, workers and communities, as the independent community hospitals might have to consider cuts to services, jobs and spending to remain viable," AG Healey wrote.

If any of those hospitals were forced to cuts services or jobs, it would have an adverse effect on access to care, she said. Additionally, Healey cited the trend of price hikes following mergers and a potential domino effect.

"Any price increases by BI-Lahey providers would likely exacerbate the increase in healthcare spending that would result from the possible patient shift outlined above," Healey wrote.

David Passafaro, spokesman for the proposed merged entity, said previously, that the unanimous approval from the PHC came with conditions. The conditions surround reporting requirements pertaining to compliance with access to facilities, services provided at various facilities and cost control. He said the new system would be required to report twice a year for first two years and then annually after that. It must also stay within the legally stipulated 3.1 percent growth guideline for total medical expenditure increases set by the state. If they do not, then the new system would be subject to a performance improvement plan.

Passafaro could not be immediately reached for comment. This story will be updated.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com