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State endorses Beth Israel Deaconess, Lahey Health proposed merger: 4 things to know

The Massachusetts Department of Public Health approved the proposed merger between Boston-based Beth Israel Deaconess Medical Center, Burlington, Mass.-based Lahey Health and three other healthcare organizations March 5, according to The Boston Globe.

Beth Israel Deaconess and Lahey Health announced their plan to merge last January after roughly six years of on-again off-again negotiations. The deal later grew to encompass Boston-based New England Baptist Hospital; Cambridge, Mass.-based Mount Auburn Hospital; and Newburyport, Mass.-based Anna Jaques Hospital.

Here are four things to know about the state DPH's decision.

1. The state DPH issued a report March 5 endorsing the proposed transaction, stating, "Research has shown that hospital mergers have historically resulted in more consolidated markets with reduced competition and higher prices. However, [the proposed merger] asserts that this transaction will introduce competition into the healthcare market in a way that will make care more affordable," according to The Boston Globe.

2. While the department's approval carries significant weight, the deal must still be approved by the Public Health Council, which is scheduled to consider the proposal in April, and the state attorney general's office. The state Health Policy Commission, a watchdog agency, will also review the proposed merger to determine if the deal is in the best interest of consumers. The agency will reportedly issue a report on the transaction this summer.

3. If the merger is successful, the combined 13-hospital entity will become a major competitor to Boston-based Partners HealthCare, which received state approval to move forward with its acquisition of Boston-based Massachusetts Eye and Ear last month. The Health Policy Commission reports the Beth Israel Deaconess-Lahey Health entity would account for 24.7 percent of Massachusetts hospital discharges for patients with commercial insurance, while Partners will be responsible for a 27 percent market share, according to The Boston Globe.

4. However, those opposed to the proposed deal argue the state DPH's decision to back the deal without completing a full cost analysis of the merger was irresponsible, The Boston Globe reports. The Make Healthcare Affordable Coalition, which is backed by Northwind Strategies, a lobbying and consulting firm with ties to other healthcare organizations, claims people of color may lose access to affordable healthcare because of the proposed merger.

Editor's note: Becker's Hospital Review reached out to Beth Israel Deaconess Medical Center and Lahey Health for comment and will update the article as more information becomes available.

More articles on transactions and valuations:
State OKs Southern New Hampshire Health, Elliot Hospital combination
UAB Health System signs second affiliation agreement in 4 weeks
UPMC finalizes affiliation with Cole Memorial Hospital

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