Most health system mergers come with months, often years, of planning. The three hospitals that became Merrimack Health got a matter of weeks.
When the now defunct Steward Health Care filed for bankruptcy in May 2024, eight of its Massachusetts hospitals were thrown into limbo. Two closed. Three buyers each took two of the rest. One of those buyers was Lawrence General Hospital, a community safety-net hospital that had been independent for 150 years.
The decision came in August 2024. The deal closed Oct. 1. Overnight, hospitals that had spent decades competing — two of them just 1.7 miles apart — belonged to the same system. There had been no time to plan strategy, culture or operations before the combination.
“Those of us who’ve been in this market a long time, we’ve been through partnerships,” Merrimack Health President and CEO Diana Richardson said during a Nov. 4 fireside chat at Becker’s CEO+CFO Roundtable. “It takes years; you get to know each other and you plan everything out. This was the complete opposite. It was more like, ‘That’s it. You’re together. Figure it out.'”
Two years later, Haverhill, Mass.-based Merrimack Health operates Lawrence General and the Holy Family Hospital campuses in Haverhill and Methuen, Mass., under one name, one medical staff and one leadership team. Ms. Richardson and CFO John Whitlock built it by doing the integration work in reverse: combine first, plan second.
Fast beats perfect
Ms. Richardson did not plan to run a health system. After leaving a prior administrator role, she took a call from the Massachusetts commissioner of public health asking her to join the state’s incident command for the Steward bankruptcy. In April 2025, she stepped in as interim CEO of Lawrence General after an unexpected leadership transition and was named permanent president and CEO in October.
The first surprise on the inside was the gap between the people and the buildings. Staff at the acquired hospitals had been buying their own bandages and toilet paper to keep caring for patients.
“We had facilities where every roof leaked, every piece of equipment was damaged,” Ms. Richardson said. “I don’t even know how many rolls of duct tape were used up trying to hold things together.”
The second surprise was how much a system can do when it has no choice. In less than two years, Merrimack Health has:
- Rebranded from Lawrence General Hospital to Merrimack Health, including rehoming religious artifacts and changing the religious identity of the former Holy Family campuses
- Created one integrated medical staff with a single set of bylaws
- Moved to one EHR, a project Ms. Richardson said typically takes 12 to 18 months and that the system completed in about six
- Consolidated maternal and child health services at one site
- Closed acute care services at one facility while opening a satellite emergency facility and behavioral health beds
- Built a single leadership team across all three hospitals
“You assume everything has to take a long time,” Ms. Richardson said. “Turns out if you put your mind to it, it might not all be perfect, but you actually can do it really quickly.”
Speed did not make the decisions painless. Consolidating maternal and child health took 120 days, and physicians pushed back hard. Ms. Richardson said the two Holy Family hospitals are 1.7 miles apart with no traffic between them, and that combining volume at one site was safer for patients as birth rates declined. Once the consolidation was done, the objections faded.
Her advice to other leaders facing hard conversations, particularly with specialists: “Don’t avoid them. Don’t push decisions off another month or two. Just do it, and it gets better.”
The same applied to physician contracts inherited from Steward, which Ms. Richardson said were built to keep specialists happy rather than to set clear expectations on pay or attendance. “It was the wild, wild west,” she said. Not every physician stayed. But the system has since recruited physicians from Somerville, Mass.-based Mass General Brigham, a shift she called “really positive.”
No secrets, no silos
About six months after the hospitals combined, Mr. Whitlock joined MerriMack Health from MetroWest Medical Center in Framingham, Mass., a Tenet Healthcare hospital. The CEO transition happened one week before his start date.
The two had known each other through the Massachusetts healthcare community but had never worked together. Mr. Whitlock said he started urging Ms. Richardson to take the permanent job on his second day.
He walked into a full reset: a new EHR, new staffing, new leadership and facilities with years of deferred maintenance. The system received state funding as part of the transaction, but it was far less than what was needed, according to Mr. Whitlock.
“From a financial standpoint, we’ve had to start rebuilding everything from the ground up,” he said. “We’re building an airplane while we’re flying it.”
The two executives sit next to each other and serve as each other’s sounding board. “I think we were quick to trust,” Mr. Whitlock said. When one of them is spiraling, the other tries to stay positive.
Ms. Richardson said humor helps. “You’d either laugh or cry,” she said. “So better to laugh.” She anchors decisions in a simple order: patients and community first, the team second, and doing both in a way that is financially sustainable.
The partnership has reshaped how the organization runs:
- Spend control. Every expense goes through a spend control committee. Mr. Whitlock said the system had to rebuild its basics because it combined two very differently run organizations: a nonprofit that relied heavily on state funding and a for-profit hospital that had leaned on a corporate office for data.
- One management team. Merrimack Health runs its three locations with a single management structure that reaches down to the director level, cutting duplication and ending what Ms. Richardson called “my hospital versus your hospital” competition.
- Open books. Leaders put financials on screen for staff and walk through the good and the bad. The board, which Ms. Richardson said used to learn about multimillion-dollar losses on Sept. 29 — a day before fiscal year-end — now gets the full picture and reinforces the message with staff.
That transparency extends to the system’s unions. “All money is fungible,” Ms. Richardson said. “If you want it here, fine. If you want it here, fine. But we can’t do both.”
Trust is building inside the C-suite, too. Mr. Whitlock said the system’s chief medical officer recently texted him about a problem at 9 p.m., something that would not have happened in their first six months. “We would have tried to all deal with it individually,” he said.
The math doesn’t work
When asked about long-term financial sustainability, Ms. Richardson was blunt. “Our fundamental economics don’t work,” she said.
About 75% of Merrimack Health’s patients are covered by public payers, and about half of that share is Medicaid. Public reimbursement is essentially flat and under threat. Meanwhile, 75% of the workforce is unionized, and Ms. Richardson said labor costs, the system’s largest expense, can rise 5% to 15% in any given year.
“When you’re going up 5 to 15% for the vast majority of your costs and your reimbursement is being held flat, that doesn’t work,” she said.
The union structure adds its own burden. The system has four unions but about 10 contracts, including multiple SEIU 1199 bargaining units across facilities. Ms. Richardson said part of the opportunity is simply reducing complexity: one conversation with labor partners instead of five about the same issue.
The commercial patients that typically offset a safety-net payer mix are hard to win. Merrimack Health is surrounded by wealthier communities that larger competitors — including Mass General Brigham and Cambridge, Mass.-based Beth Israel Lahey Health — are eager to attract.
The system’s near-term growth plan comes from the integration itself. With formerly competing hospitals now under one roof, consolidations have freed physical space for services patients previously had to travel for, including robotic surgery, vascular surgery and other procedural care. Mr. Whitlock said each expansion is weighed on community need, return on investment, competition, staffing and a harder question for a safety-net balance sheet: “Can we actually finance it?”
Longer term, Ms. Richardson said partnerships are likely to look less like traditional M&A and more like a regional safety-net approach to care in the state. The most important partner may be Massachusetts itself.
“We are essential and there’s broad agreement that we’re essential,” she said. “But we’ve got to figure out a new economic model to allow us to continue to provide that care.”
She does not think current value-based care models get there. A federally qualified health center provides about one-third of primary care for Merrimack Health’s patients and benefits from risk-based contracts, while the hospital remains an expense in that model. Ms. Richardson said she would be surprised if risk models are not eventually adjusted to account for hospital-based systems.
Coverage losses are the next pressure point. Lawrence, the largest city in the system’s service area, is 40% foreign-born and more than 80% Latino. Merrimack Health is working with regional nonprofits on multilingual outreach about Medicaid paperwork and work requirements and expects to add staff to help patients who arrive in the emergency department without coverage.
That emergency department capacity is already stretched. Ms. Richardson said Merrimack Health runs the fifth- or sixth-busiest emergency department in Massachusetts, and patients deferring care because of higher deductibles are arriving sicker and staying longer.
She said the results of the Nov. 3 midterm elections offered some encouragement but would not make the pressure from HR 1 disappear. Her larger worry is that state and federal lawmakers ease off.
“The truth is we would all be struggling and having these troubles even if none of HR 1 was on the horizon,” she said. “My worry is that our legislators, both at the state level and those who represent our state at the federal level, will take the foot off the gas on looking at healthcare and looking at safety-net healthcare in particular.”
For Mr. Whitlock, the day-to-day job is translating those pressures for the workforce without losing morale. “No, we can’t do all the things that everybody wants,” he said. “But yes, there is a potential for us to be positive in the future.”
