State backs Lahey, Beth Israel mega-merger

Business executives shaking hands
The state's broader review of the merger between Beth Israel Deaconess Medical Center and Lahey Health is still underway and will likely take several months. (Getty/Martin Barraud)

Massachusetts health officials gave the green light to a merger between Beth Israel Deaconess Medical Center and Lahey Health, saying the combined system would improve care and reduce costs.

“This is a play to really change the dynamics of the market,” Leemore S. Dafny, a healthcare economist at Harvard Business School, told The Boston Globe. “It’s a big play.”

RELATED: Beth Israel Deaconess and Lahey Health predict lower-cost care after merger

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The endorsement from the Massachusetts Department of Health reaffirms the impetus behind the merger, which both CEOs view as an opportunity to deliver high-quality care at lower cost than the state’s largest health network, Partners HealthCare.

The deal between Lahey and Beth Israel also includes three community hospitals: New England Baptist Hospital, Mount Auburn Hospital and Anna Jaques Hospital. The state values the deal at $5.3 billion, according to the Boston Business Journal.

“This is a major step forward in the regulatory review process and brings us closer to realizing our vision of ensuring access to high-quality, affordable healthcare,” David Passafaro, a senior vice president at New England Baptist Hospital, said in a statement for the hospitals to media outlets.

RELATED: Massachusetts state officials review Lahey Health, Beth Israel Deaconess Medical Center merger deal

The state's broader review of the merger deal is still underway and will likely take several months. In April, Massachusetts' Health Policy Commission will examine the merger’s effect on healthcare costs. The watchdog agency usually adheres to state recommendations, according to the Globe.

The Health Policy Commission said it’s reviewing the deal because it could impact so many patients and involves a significant amount of money. Commission Chair Stuart Altman, Ph.D., has said the merger is the most significant change in the structure of the Massachusetts healthcare market in more than 20 years and will reshape the delivery of care for millions of patients.

The Beth Isreal-Lahey system deal is part of the recent "merger-mania" among hospitals. The number of deals jumped 17% in 2017 from 2016, with consulting firm Kaufman Hall finding no signs of slowing down in 2018.