Beth Israel Deaconess, Lahey Health merger gets go-ahead with major conditions from Massachusetts AG

Beth Israel Deaconess Medical Center

Massachusetts Attorney General Maura Healey has approved the mega-merger of CareGroup, the parent company of Beth Israel Deaconess Medical Center and related facilities, and Lahey Health, a decision that will clear the way for a transaction that will significantly shift that region's healthcare landscape. The approval, however, comes with a significant set of conditions including an "unprecedented" seven-year price cap and $71.6 million in financial commitments to support healthcare services for low-income and underserved communities.

The FTC has also closed its investigation of the proposed merger and said they will not challenge it.

The merger includes CareGroup, Inc., the parent company of Beth Israel Deaconess Medical Center, Mount Auburn Hospital, and New England Baptist Hospital, on which will combine with Lahey Health System, Seacoast Regional Health System, BIDCO Hospital LLC, and BIDCO Physician LLC.

WHY IT MATTERS

The conditions included in the settlement require Beth Israel Lahey Health, the name of the soon-to-be-newly combined system, to strengthen its commitment to MassHealth, the state's Medicaid system; engage in joint business planning with its safety net hospital affiliates including Lawrence General Hospital, Cambridge Health Alliance, and Signature Brockton Hospital; and improve access to mental health and substance use disorder treatment across the system.

MORE ON WHAT YOU NEED TO KNOW

The price gap is in place for seven years following the merger and ensures that BILH's price increases will not rise above the state's Health Care Cost Growth benchmark, which is a threshold set by the state to control the annual growth of total medical spending. That limit is currently set at 3.1 percent.
The cap will avoid more than $1 billion of the potential cost increases projected by the Massachusetts Health Policy Commission, including $198 million of the increases projected in the first year post-merger out of the projected $230 million in increases.

BILH is also required to make "good faith efforts" to enroll all licensed providers in MassHealth within three years and submit their plan on how they will do so within 18 months. BILH promised not to cap the number of MassHealth patients served and will advertise the program to increase enrollment of MassHealth patients, including efforts aimed specifically at New England Baptist.

The settlement stipulates that BILH will spend $71.6 million over eight years to improve care access for low-income and underserved communities, specifically focusing on support for community health centers, safety-net hospitals, and behavioral health. The new system must strategize with its safety-net hospital affiliates, including planning for clinical service expansion or closure, and the opening, closing or expansion of facilities.

Finally, BILH must employ a third party monitor approved by the AG's Office who will oversee BILH's compliance with the conditions and submit an annual report to the AG's Office for the next ten years.

ON THE RECORD

"Through this settlement, Beth Israel Lahey Health will cap its prices, strengthen safety net providers across the region, and invest in needed behavioral health services," said AG Healey. "These enforceable conditions, combined with rigorous monitoring and public reporting, create the right incentives to keep care in community settings and ensure all our residents can access the high-quality health care they deserve." 

"The assessment of whether to take enforcement action was a close call. However, based on the commission staff's work and in light of the settlement obtained by the Massachusetts AG, we have decided to close this investigation...We will continue to keep a watchful eye on this and other health care transactions and take action as appropriate," the FTC said.

"Today we take an important step forward in making our vision a reality. We appreciate the enormous effort that the Attorney General, her staff and the Federal Trade Commission have devoted to our proposal.  We share their commitment to healthcare innovation in Massachusetts, and we are eager to build on the strengths of our legacy organizations and deliver on our promise to our patients, their families and our communities," said Dr. Kevin Tabb, CEO of Beth Israel Deaconess Medical Center and future CEO of the new system, Beth Israel Lahey Health. 

Twitter: @BethJSanborn

Email the writer: beth.sanborn@himssmedia.com