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Press Statement

Press Statement  HPC ISSUES COST AND MARKET IMPACT REVIEW REPORT ON THE PROPOSED CREATION OF THE “BETH ISRAEL LAHEY HEALTH” SYSTEM

7/18/2018
  • Massachusetts Health Policy Commission

Media Contact   for HPC ISSUES COST AND MARKET IMPACT REVIEW REPORT ON THE PROPOSED CREATION OF THE “BETH ISRAEL LAHEY HEALTH” SYSTEM

Matthew Kitsos

Statement from Dr. Stuart H. Altman, Chair, Massachusetts Health Policy Commission:

“The scale and scope of the proposed Beth Israel Lahey Health (BILH) merger is unprecedented, even by the standards of recent Massachusetts hospital mergers and acquisitions that have occurred since the passage of the health care cost containment law. Today’s Preliminary Report found that the proposed transaction would further consolidate the delivery of care in Massachusetts and the new entity will be on par with Partners HealthCare system, in terms of its geographic size and volume of health care services provided to Massachusetts residents. We found that the proposed consolidation would significantly enhance the bargaining leverage of the new system to obtain higher prices from commercial insurers, potentially increasing health care spending by an estimated $138 million to $191 million annually. While plans to shift care to the new system from other, higher-cost hospitals would generally be cost-reducing, the HPC found that patient care would likely be diverted from lower-cost hospitals as well, resulting in diminished savings. There is no reasonable scenario in which such savings would offset spending increases if the new system obtains the projected price increases. Following the parties’ written Response, the Final Report will be made available to the general public and relevant oversight agencies.”

Next Steps:

Following the release of the preliminary CMIR report, the parties to the transaction then have 30 days to submit a written comment, including any commitments and assurances based on the findings, or to provide additional context. Other interested parties may submit any comment to the HPC during that time period as well. In order to allow for public assessment of the findings, the transactions may not be finalized until the HPC issues its Final Report. The HPC expects to release its Final Report at a September Board meeting.

Background:

The HPC is an independent state agency governed by an 11-member Board with diverse experience in health care. The HPC's mission is to advance a more transparent, accountable, and innovative health care system. As part of its work to achieve this mission, the HPC is tasked with monitoring and reviewing material changes within the health care marketplace, including mergers, acquisitions, and new affiliations. The HPC may also engage in a more comprehensive review of particular transactions anticipated to have a significant impact on health care costs or market functioning. The result of such “cost and market impact reviews” (CMIRs) is a public report detailing the HPC’s findings. These robust, data-driven reviews detail the impact of proposed changes on costs and market functioning, on the Commonwealth’s ability to meet the benchmark, and on quality and access to care for consumers. Through this process, the HPC seeks to encourage providers and payers alike to evaluate and take steps to minimize negative impacts and enhance positive outcomes of any proposed change. While the HPC does not have the authority to block proposed transactions, in order to allow for public assessment of the findings, the transactions may not be finalized until the HPC issues its Final Report. Where appropriate, reports may identify areas for further review or monitoring, or be referred to other state agencies in support of their work on behalf of health care consumers.

In total, the HPC has conducted cost and market impact reviews of nine transactions since its inception in November 2012. The HPC has also received notices for an additional 81 transactions that did not proceed to a full cost and market impact review. All cost and market impact reviews and material change notices are posted on the HPC’s website here and here, respectively.

Media Contact   for HPC ISSUES COST AND MARKET IMPACT REVIEW REPORT ON THE PROPOSED CREATION OF THE “BETH ISRAEL LAHEY HEALTH” SYSTEM

  • Massachusetts Health Policy Commission 

    The Massachusetts Health Policy Commission (HPC), established in 2012, is an independent state agency charged with monitoring health care spending growth in Massachusetts and providing data-driven policy recommendations regarding health care delivery and payment system reform. The HPC’s mission is to advance a more transparent, accountable, and innovative health care system through independent policy leadership and investment programs.
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