Council imposes new conditions on BI-Lahey merger

Tabb: Terms approach 'outer limits of what's doable'

STATE HOUSE NEWS SERVICE

NEW CONDITIONS IMPOSED Wednesday on a pending 13-hospital merger are “unprecedented,” according to the executive set to helm the new system, who said the terms and the 10-year period for which they will be in place are “approaching the outer limits of what’s doable.”

The state Public Health Council granted preliminary approval of the merger involving Beth Israel Deaconess and Lahey Health in April, and on Wednesday voted to tack on additional conditions addressing patient access, cost increases, and investment in behavioral health and primary care.

Among other measures, the conditions require the system to submit to the Department of Public Health a proposal for “how it will address the low percentage of MassHealth in its payer mix,” and to make “good faith efforts” to ensure the number of MassHealth patients it serves does not drop.

If the system’s spending outpaces the state’s health care cost growth benchmark, the new hospital system would be required to develop a “community provider investment plan” supporting behavioral health and primary care, and to invest a portion of the excess expenses in keeping with that plan.

“This deal is an important change in health care,” Beth Israel Deaconess CEO Kevin Tabb told reporters. “It’s the most important change in the last two decades, and there’s a legitimate request by all of the parties to make sure that anybody that comes forward will actually do what they say we’re going to do. I am confident that we will not only do what we say we’re going to do, but we will exceed those expectations.”

Tabb, who would serve as CEO of the new system, told the council he is still in talks with Attorney General Maura Healey, who is also reviewing the deal. He said the “totality” of conditions he expects to be imposed by the state “are strict, and take us to the outer edge of what I think is manageable.”

“Yes, this is something that we can and must do, but it is approaching the outer limits of what’s doable, and I need to further remind people that while I agree completely with many of the concerns that have been raised about the woes of health care in Massachusetts and in this country, we can’t solve all of that on the backs of this single transaction,” he said.

After the vote, Tabb said he was “very confident that we’re approaching the final steps of all the different approvals that are needed.”

He told the council he could not get into specifics of his discussions with Healey but said the system would be “making significant — and I would stress the word ‘significant’ — long-term investments in community-based institutions on issues related to social determinants of health.”

Paul Lanzikos, a member of the Public Health Council and former state elder affairs secretary, said the vote represented more than “just approving the specific written requirements.”

“It’s entering into a commitment to meet the expectations, the needs of us as a society, and I would hope that the applicant…that you’re taking this as a commitment and more than just as a set of conditions you legally have to follow,” said Lanzikos, the executive director of North Shore Elder Services.

The council’s move comes after another state entity, the Health Policy Commission, sounded an alarm over the merger’s potential to drive up health care costs. The commission’s review said the consolidation would give the new Beth Israel-Lahey Health system greater clout to negotiate higher prices from commercial insurers, which could increase total health care spending by $128.4 million to $170.8 million annually for inpatient, outpatient, and adult primary care services.

The merger would create the state’s second-largest hospital system, after Partners HealthCare. It would encompass one academic medical center, two teaching hospitals, eight community hospitals and two specialty hospitals, with 2,400 beds, 1,000 primary care physicians, and 3,600 specialists.

Bonny Gilbert of the Greater Boston Interfaith Organization said her group’s “last hope” is that Healey will either stop the transaction or “write real conditions that have some hope of mitigating the harms that HPC is predicting” in terms of higher costs and spending.

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She said the council’s plan offered nothing “to protect us from higher prices for premium payers” and pointed to recent figures from the state’s Center for Health Information and Analysis that showed consumer out-of-pocket health care spending last year grew at a faster clip — 5.7 percent — than overall health care spending, wage growth and inflation.

“This transfer of wealth from the pockets of those of us who pay the bills to the wealthiest and highest cost hospital systems has got to stop,” Gilbert said. “The conditions put forward today do not do this.”