- The merger of Beth Israel Deaconess Medical Center and Lahey Health could increase costs in Massachusetts by $138.3 million to $191.3 million a year for inpatient, outpatient and adult primary care services, a state health panel warned in a new report.
- The cost estimate is the highest made by the Massachusetts Health Policy Commission in any deal it has reviewed, according to the Boston Globe.
- Spending on specialty physician services would also rise under the projections — from $29.8 million to $59.7 million a year. The panel called its estimates conservative.
If completed, the deal would create a combined entity equal to Partners HealthCare System, the largest system in the state, substantially increasing market concentration and boosting the new company’s leverage to exact higher prices from payers.
“While plans to shift care to BILH from other providers and to lower-cost settings within the BILH system would generally be cost-reducing, there is no reasonable scenario in which such savings would offset spending increases if BILH obtains the projected price increases,” the report said.
In fact, if all of the proposed care redirection goals are met, the projected $8.7 million to $13.6 million in savings would offset only 3% to 7% of the estimated price increases, it added.
While merging health systems often promise greater savings and improved patient outcomes, that’s not always the case. A recent University of California-Berkeley study of health system consolidation in the state found highly concentrated markets result in higher prices for hospitals, physician services and Affordable Care Act premiums, especially in northern California.
A recent JAMA report found consolidation may hurt patient safety due to new and unfamiliar patient populations, lack of institutional attention to specialized needs and, depending on leadership, a focus on finances over patient safety.
The Beth Israel-Lahey merger would be one of the largest in Massachusetts history. State health officials have given tacit approval to the deal, but it is still under review by the FTC, the state’s attorney general and the health policy commission. The commission has no authority to reject the merger.
Earlier this month, Massachusetts Attorney General Maura Healey raised concerns that the merger could drive up costs, depress access to care and destabilize independent hospitals, according to a Boston Globe report.
As M&A continues to ramp up in the hospital industry, regulators may look to take a more active role in guarding patients against unintended costs and consequences. The Massachusetts Health Policy Commission said it will issue a final report on the Beth Israel-Lahey merger after the parties have a chance to respond to the initial findings.