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

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Beth Israel Deaconess and Lahey Health see their impending merger as a chance to take market share by delivering high-quality care at lower cost.

Executives expect Beth Israel Deaconess Medical Center’s merger with Lahey Health to result in market share gains and cost decreases.

The CEOs of both organizations told The Boston Globe they believe their merger will answer demand from the regional marketplace, where they say quality care is significantly more expensive than in other states.

“We’ve received a fair amount of quiet encouragement on this—more than I expected—from a variety of different players,” said Kevin Tabb, M.D., the CEO of Beth Israel Deaconess.

Tabb has been tapped to run the combined system, which would span eight hospitals and $4.5 billion in annual revenue on completion of the deal, The Globe reported.

The two organizations had discussed a partnership in the past, and signed a letter of intent for a merger in January. Tabb and Howard R. Grant, M.D., CEO of Lahey, have reportedly been encouraging patients to seek less-expensive care in community hospitals, rather than visiting the pricier academic medical centers that abound in Massachusetts. They believe the lower cost of care provided by the combined entity will be able to take market share from their high-cost competition, suggesting savings of $18 million for each percentage point of share gained.

The executives also indicated that they felt pressure to make this move from the uncertainty and disruption expected to stem from policy changes tied to healthcare reform. That uncertainty stems both from policies embedded in the Affordable Care Act and potential policy changes to the original reform bill that may get implemented as legislation attempting further reforms winds its way through Congress.