Beth Israel Deaconess deal with two other providers falls apart

Beth Israel Deaconess Medical Center's opportunity to create a Massachusetts-wide healthcare system that would rival Partners Healthcare in size fell apart.

Merger talks between Beth Israel Deaconess, the Lahey Health system and Atrius Health medical groups collapsed after 10 months of negotiations, according to the Boston Globe.

The groups has a chance to create a statewide healthcare system rivaling Partners in size and scope. However, the Globe noted that negotiators could not come to terms on who specifically would lead the merged system. "We have mutually decided to discontinue those discussions to focus attention on significant initiatives we are individually pursuing while leaving open the possibility of a more substantial partnership at a later date," a joint statement issued by the three parties said.

Partners is the largest provider in the state and apparently one of the deftest in terms of setting reimbursement rates from payers. Studies of healthcare finance in Massachusetts indicate that Partners receives up to 60 percent more than other hospitals in the state for performing the same work, and it plays a significant role in making healthcare delivery in Massachusetts cost 55 percent more than the national average.

The Boston Business Journal noted there were several reasons for the deal collapse. The potential business deal would result in close regulatory scrutiny and there was a vacuum in leadership at Atrius, by far the Bay State's largest medical group, for nearly six months. The Business Journal also questioned whether the deal made financial sense. 

"One reason that Partners has a high cost structure is because it has two large academic medical centers, which have high research and medical education overhead. Two smaller systems--one with Lahey Hospital and Medical Center as the hub, and the other with (Beth Israel) as the hub--may be better at keeping costs lower," the Business Journal observed.

To learn more:
- read the Boston Globe article
- check out the Boston Business Journal article

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