Further Hospital Consolidation in Wake of ACA?

The Boston Globe reports that “Beth Israel Deaconess Medical Center and Lahey Health are negotiating a possible merger that would create a large health system to compete with the dominant Partners HealthCare.”  The article describes Beth Israel Deaconess as “a large academic medical center affiliated with Harvard Medical School that has built its network by acquiring hospitals in Milton, Needham, and Plymouth,” and Lahey Health as a hospital system including “Lahey Hospital and Medical Center in Burlington, a teaching hospital affiliated with Tufts University School of Medicine … and community hospitals in Beverly, Gloucester, and Winchester.”

Legal considerations bear upon both the impetus for hospital consolidations and their consummation.  The article explains as follows:

Hospital mergers in Massachusetts are reviewed by the Health Policy Commission, a state agency, which cannot block deals but can refer them to the attorney general.

 

The rekindling of merger talks shows the urgency both sides feel to grow to compete with Partners, the state’s biggest and richest health system. And in today’s shifting health care industry, many executives say a larger network of hospitals, doctors, and services is needed to successfully compete.

 

Hospital consolidation has accelerated around the country in recent years, spurred in part by the federal Affordable Care Act.

 

The law encourages providers to adopt new payment systems that reward them for keeping patients healthy, rather than rewarding doctors and hospitals for every patient visit, service, and procedure.

 

The article notes that the merger talks are in the “early stages” and that on two previous occasions Lahey and Beth Israel Deaconess attempted but failed to negotiate a merger to completion.

JRB