Beth Israel Deaconess Medical Center (BIDMC) and Lahey Health signed a Letter of Intent on Monday to begin fleshing out the details of the potential merger the medical centers have been discussing.
A merger between BIDMC and Lahey Health, which each operate four hospitals in Massachusetts, would result in a regional powerhouse rivaled only by Partners HealthCare, the largest health system in the state.
- As Massachusetts struggles to contain spending on healthcare, there are some concerns that further consolidation would only exacerbate the problem.
This is the fourth time in the last five years or so that BIDMC and Lahey have engaged in negotiations over a potential merger, the Boston Business Journal reported. While the medical centers have been going back and forth on their plans to merge, the fourth time might be the charm.
Disagreements over management structure doomed earlier negotiations, the Boston Globe reported. But it appears those details are being hammered out. BIDMC and Lahey have agreed that the current BIDMC CEO would become the CEO of the combined system and the current Chair of Lahey Health Board of Trustees would become the Chair of the Board. They both have "a lot of work left to determine the specifics of a combined system," according to the announcement. The deal will also require approval from state regulators.
As consolidation in the industry continues, there is debate over the results when it comes to costs. Healthcare costs in Massachusetts are higher than in most other states and high costs are due at least in part to prices set by behemoths like Partners, according to the Boston Globe. One study recently found that prices set by the largest health systems in northern California are around 20% higher than at other hospitals in the state. MedPAC weighed in on the topic recently and determined that healthcare costs increase as health systems gain more market power.
On the other hand, an analysis the American Hospital Association (AHA) released last week shows hospital mergers between 2009 and 2014 resulted in cost savings and quality improvements.