Beth Israel Lahey Health becomes official
Two major Massachusetts health systems have finalized their merger to become Beth Israel Lahey Health (BILH). Boston based-Beth Israel Deaconess Medical Center and Burlington-based Lahey Health formed the new system, which has 13 hospitals, 800 primary care doctors, 3,500 specialists, 35,000 employees and serves 1.3 million patients in eastern Massachusetts.
The new system includes four academic and teaching hospitals, eight community hospitals, specialty hospitals for orthopedics and behavioral health and ambulatory and urgent care centers.
The Massachusetts Health Policy Commission has warned that the creation of BILH, which becomes the second-biggest system in the commonwealth, will lead to higher prices. The state's attorney general ultimately approved the merger in November with conditions, including price controls, investments in safety net hospitals, required Medicaid participation and improved access to mental health and substance use disorder treatment.
The new, larger BILH gives more competition to Partners HealthCare, which is the state's largest health system. Partners, which includes Mass General Hospital and Brigham & Women's Hospital, is also involved in merger activity. The health system is close to a deal to purchase Providence, Rhode Island-based Care New England.
Kevin Tabb, president and CEO of Beth Israel Lahey Health, said the merger is a step toward providing patients with access to high-quality, affordable care. "Through local and system partnerships, as well as the enthusiasm and talent of all our employees and providers, we will invest in and strengthen community-based care, informed by innovation and discovery," Tabb said.
BILH is the latest health system merger and one that involves two major health companies joining forces. Kaufman Hall said in a report earlier this year that the average size in revenue of sellers was $409 million in 2018. That was about 14% higher than a decade ago. The activity includes seven transactions that involved sellers with net revenues of at least $1 billion.
Rather than buy other systems to merely grow a system's footprint, though, Kaufman Hall said health systems have become wiser with their purchases. Now, health systems think more strategically when seeking M&A possibilities rather than growing opportunistically. As an example of the trend, Kaufman Hall said there were fewer deals in 2018 involving financially distressed sellers.
However, the Center for American Progress charged that provider consolidation isn't lowering costs or improving care coordination, which are common arguments in favor of M&A activity. Instead, healthcare M&A is in some cases leading to higher healthcare costs and reduced competition.