Tufts Medical Center CEO warns Beth Israel-Lahey merger could raise costs, increase disparities

A bar chart showing positive business growth
The CEO of Tufts Medical Center is warning that the Beth Israel Deaconess Medical Center-Lahey Health merger could lead to higher costs. (Getty/NicoElNino)

The chief executive at Tufts Medical Center slammed the potential merger between Beth Israel Deaconess Medical Center and Lahey Health at a hearing this week, saying that the deal could worsen healthcare disparities. 

Michael Wagner, M.D., told the Boston City Council at a Tuesday hearing to discuss the merger that the deal isn't likely to lower healthcare costs as the two providers have promised.  

Beth Israel and Lahey have said their alignment would pull patients away from the pricier facilities operated by Partners HealthCare, which would drive down medical spending

"This is a false argument," Wagner said. "The new combined Beth Israel-Lahey system would likely siphon the remaining commercial patients from non-Partners hospitals, community health systems and physicians." 

RELATED: 13 healthcare M&A deals that made headlines in 2017 

Consumer advocates have also warned that healthcare mergers, despite promises of lower costs, often fail to deliver savings to patients.  

Wagner's testimony at the hearing marks the first time that a competing health system has come out against the merger. Executives from another competitor, Steward Health Care System, declined an invitation to testify, The Boston Globe reported

Wagner said Beth Israel and Lahey's growth plans would likely lead to higher costs, as the combined entity would have to keep up with rates set by Partners to attract physicians and other potential employees. 

The combined system would also treat the lowest percentage of Medicaid patients among health systems operating in Eastern Massachusetts, Wagner said. The new system—which intends to operate as "NewCo"—would see 15% of its patient population made up of MassHealth recipients. That's compared to 21% for Tufts' parent system Wellforce and 31% at Tufts Medical Center itself, he said. 

RELATED: Healthcare deals off to a fast start in 2018, with no signs of slowing down 

If NewCo is attracting more commercial patients, it will lead to lower reimbursement rates for hospitals like Tufts that treat high volumes of Medicaid patients, he added, and could exacerbate care disparities between these populations. 

"The have-not systems would not receive adequate reimbursements to compete with the hospitals who have chosen to focus on more affluent and commercially insured patients," Wagner said. 

Representatives for BIDMC and Lahey Health who attended the hearing reiterated their stance that the deal would enhance competition and lead to lower patient costs. 

RELATED: Healthcare mergers post a patient safety risk, study finds 

"When you look at the concern on the part of various communities as to whether this will impact their care, it will—for the better," David Spackman, general counsel and senior vice president of government relations for Lahey, said. 

"We're going to be lower-priced, we're going to be high-quality, we're going to be able to connect their care through every portion of their trip through the medical system. We've done it before, we will do it again, but together we will do it better," he added. 

A number of state agencies and the Federal Trade Commission are taking a long, hard look at the Beth Israel-Lahey deal. The merger has been approved by the Massachusetts Department of Health and the state Public Health Council, but it is still awaiting the results of a review from the Health Policy Commission and for the state's attorney general to weigh in. 

A video of the full hearing is embedded below: