It's official: Beth Israel Deaconess, Lahey Health agree to merge
- Beth Israel Deaconess Memorial Center and Lahey Health signed a merger agreement last week, Boston Business Journal reported.
- The agreement was also signed by New England Baptist Hospital, Anna Jacques Hospital and Mount Auburn Hospital. If approved, it would create a 13-hospital system, the second-largest in Massachusetts.
- The network is looking to compete with Partners HealthCare as a lower-cost network, U.S. News and World Report reported.
After multiple years and merger attempts, Beth Israel and Lahey Health finally put pen to paper.
Late last year, the two systems announced they were exploring the merger, the fourth attempt between the two in the past six years. In January, they went one step further, announcing the two organizations had signed a letter of intent to begin fleshing out the details.
With this merger, the new organization would be poised to compete against the state's major health system: Partners.
The deal still has to be approved by state regulators, and while the two organizations may have cause for celebration, some are not so keen on the announcement. Dr. Stuart H. Altman, chairman of the Massachusetts Health Policy Commission, said in a prepared statement he is concerned about market consolidation and the declining number of independent community hospitals. “It represents the most significant change in the structure of the Massachusetts healthcare market in more than 20 years,” he said.
Consolidation has been a trend in the industry as of late. Since 2010, 561 hospital mergers have occurred and almost half of hospital markets are "highly concentrated," researchers recently wrote in JAMA. Healthcare M&A volume was up (0.9%) while value was down (49.3%) in Q1 this year, compared to the same time period last year. In addition to the Lahey-BIDMC deal, SSM Health signed a letter of intent to acquire a health system and clinic from the Wisconsin-based Congregation of Sisters of St. Agnes last week.
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.
Provider merger mania is spreading across New England. Partners Healthcare agreed to buy Care New England Health System of Rhode Island earlier this year. That merger is still under review and a bill has been introduced in the Rhode Island state legislature with the hope of speeding up the purchasing process. Care New England's competitor LifeSpan is open to a merger of the two Rhode Island systems if the Partners deal doesn't close.
- U.S. News & World Report Boston-Area Hospitals Finalize Massive Health Merger Plan
- Boston Business Journal Lahey, Beth Israel and others sign definitive deal for mega-merger
- Healthcare Finance Beth Israel, Lahey Health 13-hospital merger proposal is formalized, moves on for state review
- Healthcare Dive Beth Israel and Lahey Health agree to explore merger
- Healthcare Dive Healthcare M&A value down, volume up in 2017 so far
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