B.I.-LAHEY DEAL GETS PRELIMINARY OK

State puts conditions on major hospital merger

New conditions imposed yesterday around a pending 13-hospital merger are “unprecedented,” according to the executive set to helm the new system, who said the terms and the 10year 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 yesterday 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, it 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.

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.