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CareGroup, Lahey merger gets official thumbs up from Massachusetts Department of Health

Key stakeholders had a hearing in front of the Public Health Council earlier this month where councilors voted unanimously to approve the deal.

Beth Jones Sanborn, Managing Editor

Lahey Hospital. Credit: Google Street ViewLahey Hospital. Credit: Google Street View

The Massachusetts Department of Health's voting body has given the official green light to a major merger that would see the CareGroup system, which includes Beth Israel Deaconess Medical Center, Lahey Health and a stand-alone hospital in Newburyport become one new large system. 

Key stakeholders had a hearing in front of the Public Health Council earlier this month where councilors voted unanimously to approve the merger deal with certain conditions, according to to a letter sent to Lahey Health's General Counsel David Spackman.

[Also: Proposed mega-merger of CareGroup, Lahey Health gets greenlight from Massachusetts Health Department]

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The conditions surround reporting requirements pertaining to compliance with access to facilities, services provided at various facilities and cost control, said David Passafaro, spokesman for the proposed merged entity. They are required to report twice a year for first two years and then annually after that.

The new system, which has been pitched as a low-cost, high quality alternative fully integrated system with broad capacity, must also stay within the legally stipulated 3.1 percent growth guideline for total medical expenditure increase guideline set by the state of Massachusetts. If they do not, then the new system would be subject to a performance improvement plan.

Passafaro said there was an overall sentiment that the current healthcare market in Massachusetts, with a single dominant system, is not sustainable or healthy, does not promote services in the community and has long been seen as an issue in the state.

"So we in our proposal become a challenger to that one dominant player because we would have enough size and geographic reach to be competitive," Passafaro said.

Partners Healthcare had not responded to a request for comment at the time of publishing.

The Health Policy Commission and leaders in the proposed new system are engaged in conducting and compiling a Cost and Market Impact Report, a study that aims to document the impacts of what stakeholders say merger will involve and accomplish.

They are assembling data and information of all hospitals involved and proposed plans for merger as well as analyzing Eastern Massachusetts market impact, as well as how it will impact cost and cost variations among hospitals.

The HPC is on track to issue a preliminary report sometime in mid-June. Passafaro said whatever the report says, there is a 30-day period to review report and respond as the applicant, as will anyone who wants to publicly comment as the report is open to the public. 

Once that process is done HPC will meet in formal session and vote to allow deal to go forward or they can refer it to the state attorney general. The AG has enforcement power to mandate conditions, including economic ones and referral to the agency is not necessarily a negative commentary on the proposed merger. The AG is the enforcement arm for all nonprofit corporations in the state.

"I think generally we are all pretty excited about it and we are cautiously optimistic because we got over the first regulatory processes and are engaged actively with Health Policy Commission. And they face the same question of if we don't allow the merger to go forward then what happens to the marketplace?"

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com