Beth Israel-Lahey Health merger clears major hurdle with OK from regulators

Handshake business deal executives
Lahey Health's merger with Beth Israel is slowly winning crucial state approvals. (Pixabay)

The planned merger between Lahey Health and Beth Israel Deaconess Medical Center has cleared another major hurdle, winning approval from a Massachusetts regulator. 

The deal, one of the largest in the state's history, was already approved by the Massachusetts Department of Public Health last month before winning the OK of the state Public Health Council this week. 

The group voted to approve the providers' plans to form a new entity at its meeting on Wednesday. 

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More steps remain, however. The state's Health Policy Commission is still conducting its review of the deal, and Massachusetts Attorney General Maura Healey also has yet to weigh in on the merger plans. 

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Should the merger be finalized, Lahey and Beth Israel would operate as "NewCo," a joint entity that includes 13 hospitals and would significantly change the healthcare landscape in eastern Massachusetts. 

In addition to Lahey's facilities and Beth Israel, New England Baptist Hospital, Anna Jaques Hospital and Mount Auburn Hospital will join NewCo. The deal is valued at $5.3 billion. 

Though progress on clearing regulatory barriers has been slow, executives at the two facilities are still optimistic, according to an article from The Boston Globe. 

"I feel very good and energized," Kevin Tabb, M.D., CEO of Beth Israel and the chief executive of the future joint venture, told the Globe. "I think there's a general recognition that this makes sense, that this is long overdue in the market and that ultimately it will be good...first and foremost for patients." 

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The Health Policy Commission's review is expected to take a few more months to complete, with a likely release set for this summer. The watchdog agency will be looking into how the merger could impact patient costs, but its recommendations are often in line with the state's. 

Executives for Lahey and Beth Israel have maintained that the merger would lead to lower costs and will better meet the needs of patients in the region, who often pay more for high-quality care than people who live in other states. 

Experts have warned, however, that ongoing consolidation in healthcare could instead lead to higher patient costs. Despite these concerns, the industry's appetite for mergers has not been sated, with 13% more deals announced in 2017 compared to the year before.  

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