Beth Israel Deaconess, Lahey Health say merger will save up to $270 million a year, contradicting state report

Beth Israel Deaconess Medical Center. Credit: Google Street View

Beth Israel Deaconess Medical Center and Lahey Health System have proposed a merger they recently said will save millions of dollars a year in healthcare costs -- contradicting a state report claiming the exact opposite.

The state report, from the Massachusetts Health Policy Commission, estimated that the proposed merger could increase annual spending statewide by $138 to $191 million, when factoring in inpatient, outpatient and adult primary care services.

The commission also determined that spending for physician specialty services could swell an additional $30 to $60 million annually, a finding it calls "conservative."

At the root of its cost estimates is the size of the proposed system. Dubbed Beth Israel Lahey Health, the new system, if the deal goes through, would roughly equal the size of Massachusetts' largest hospital network, Partners Healthcare.

Because of that, the commission said market concentration in the state would greatly increase, and allow the new system leverage to demand higher prices from insurers.

In their response, officials from the health systems said that rather than increasing costs, the merger would actually save between $149 to $270 million per year, largely due to better efficiency and more competition with Partners.

The officials, declining to mention Partners by name, said that the state's "dominant health system" would still be twice as large as Beth Israel Lahey Health. Partners currently has four times the revenue of its next largest competitor.

The proposed merger would include Beverly Hospital, Addison Gilbert Hospital, Anna Jaques Hospital, Lahey Medical Center and Lahey Outpatient Center. The merger is being reviewed by the Health Policy Commission.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com