Beth Israel-Lahey Health merger cleared with conditions, including price cap
- The Massachusetts attorney general this week approved the merger between Beth Israel Deaconess Medical Center and Lahey Health with various conditions.
- The combined system will be barred from raising prices beyond a certain threshold for seven years following the merger. The price increase must be below the state's own healthcare cost growth benchmark, which is currently set at 3.1%, the AG's office said.
- The combined entity must also participate in the state's Medicaid program indefinitely, increase access to mental health and substance use disorder treatment and funnel significant investments to its safety net hospitals and programs.
State and federal regulators gave their blessing to the marriage of Beth Israel Deaconess Medical Center and Lahey Health, which will become the state's second largest health system behind Partners HealthCare.
The approval, albeit with conditions, ends intense scrutiny of the healthcare merger.
The Federal Trade Commission said that while it was not an easy decision, it will not seek to block the merger. The AG's settlement was one reason the FTC decided to forgo a legal challenge.
An analysis of the merger by the Massachusetts Health Policy Commission warned the deal would likely lead to higher prices.
"After the transaction, BILH's market share would nearly equal that of Partners HealthCare System (Partners), market concentration would increase substantially, and BILH would have significantly enhanced bargaining leverage with commercial payers," according to the report.
The deal is expected to close during the first quarter of next year and the combined system will be operate as Beth Israel Lahey Health.
"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," Kevin Tabb, CEO of Beth Israel Deaconess Medical Center, who will serve as CEO of Beth Israel Lahey Health, said in an email statement to Healthcare Dive. "We share their commitment to health care 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."
After multiple merger attempts, the two finally agreed to a deal last summer. Togethe,r the two are poised to serve as a significant competitor to Partners.
The deal comes amid another year of dizzying healthcare mergers, which are only expected to continue.