Massachusetts AG, Federal Trade Commission give OK to Beth Israel, Lahey megamerger

Close-up of handshake between person in suit and person in business shirt.
The Massachusetts Attorney General and the Federal Trade Commission have given their OK for the Beth Israel-Lahey deal. (Getty Images/FS-Stock)

Massachusetts' Attorney General gave the OK for the proposed merger between Beth Israel Deaconess Medical Center and Lahey Health System following a number of agreements with health system officials, including a promise not exceed a seven-year price cap.

The Federal Trade Commission also voted to close its investigation of the proposed transaction (PDF).

The two approvals cleared the final major hurdles facing the proposed merger, which would include 13 hospitals and would significantly reshape the healthcare landscape in the eastern part of Massachusetts. 

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As part of agreements with the state  , officials from the health systems seeking to form the Beth Israel Lahey Health system also agreed to $71.6 million in financial commitments to supporting health services for low-income and underserved communities in Massachusetts. 

RELATED: State backs Lahey, Beth Israel mega-merger

The health system agreed to strengthen their commitment to the state's Medicaid program, engage in joint business planning with safety net hospital affiliates and improve access to mental health and substance use disorder treatment. The health system will be required to retain a third-party monitor to ensure compliance.

“These enforceable conditions, combined with rigorous monitoring and public reporting, create the right incentives to keep care in community settings and ensure all our residents can access the high-quality health care they deserve," said Attorney General Maura Healey in a statement.

The deal received the blessing of the state's Department of Health in the spring but hit a roadblock when the state watchdog group—the Health Policy Commission—asked the attorney general's office to determine whether it could negotiate terms to address potential cost increases and barriers to access to care raised its own review of the transaction.

RELATED: Watchdog group asks Massachusetts AG to review Beth Israel-Lahey merger

In connection with that request, the new health system agreed to keep price increases below the state’s Health Care Cost Growth benchmark, a state-set goal to control the annual growth of total medical spending set at 3.1%.

The deal was applauded by Massachusetts Health Policy Commissioner Martine Cohen, who said the settlement would impact access for patients with mental health and substance use disorders.