Press Release

Press Release  HPC Issues Final ‘Cost And Market Impact Review’ Report For Beth Israel Lahey Health Merger

Report Referred to Attorney General and Department of Public Health for Further Consideration
For immediate release:
9/27/2018
  • Massachusetts Health Policy Commission

Media Contact   for HPC Issues Final ‘Cost And Market Impact Review’ Report For Beth Israel Lahey Health Merger

Matthew Kitsos, Press Secretary

BostonToday, the Massachusetts Health Policy Commission (HPC) issued the final report on its cost and market impact review (CMIR) of the planned formation of Beth Israel Lahey Health (BILH), which would merge two of the largest and most well-established health systems in the Commonwealth, along with three additional hospitals that are currently corporately independent.

“While there is a potential for the transaction to result in improvements to health care quality and access, there are also ongoing concerns, including a potential for significant price increases that will drive up the cost of health care in Massachusetts,” said Dr. Stuart H. Altman, Chair, Massachusetts Health Policy Commission. “The Board voted unanimously to refer this matter to determine if there are strong and enforceable steps BILH can take which, combined with robust public monitoring, may mitigate these concerns and maximize the likelihood that BILH will achieve significant efficiencies, positively transform care delivery, and enhance access to high quality care, particularly for vulnerable populations.”

On July 18, 2018, the HPC released a preliminary report on the transaction, and the parties provided a response to the preliminary report on August 17, 2018. The parties’ response and the HPC’s analysis of their response are attached as exhibits to the final report.

Key findings from the final CMIR report:

  1. Cost and Market Impact: The HPC estimates that the proposed consolidation would significantly enhance the bargaining leverage of BILH to obtain 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. With similar price increases for specialty physician services, spending could increase by an additional $29.8 million to $59.7 million annually.

    The parties’ care delivery plans and plans to shift care to lower-cost settings may result in savings, but these savings would not offset spending increases if the parties obtain the projected price increases. While the parties have stated they would achieve internal savings and generate new revenue that would allow them to invest in their proposed plans and be financially successful without price increases, they have declined to offer any commitments to limit future price increases to date.
     
  2. Quality and Care Delivery Impact: The parties are considering plans for integrating their unique quality oversight and management structures, but have not yet identified baseline data or transaction-specific quality improvement goals, except in relation to a few specific care delivery initiatives. More detailed plans for these specific initiatives suggest a potential for quality improvement.
     
  3. Access Impact: Based on the current patient mix of the proposed BILH-owned hospitals, the BILH-owned system would have among the lowest mix of Medicaid discharges and proportion of discharges and ED visits for non-white patients and Hispanic patients compared to other large eastern Massachusetts hospital systems. The parties so far have declined to offer any commitments to expand access for Medicaid patients. The parties are important providers of behavioral health services in eastern Massachusetts, and their plans for expanding these services have the potential to enhance access.

The final report can be found here and the presentation from HPC staff can be found here.

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Media Contact   for HPC Issues Final ‘Cost And Market Impact Review’ Report For Beth Israel Lahey Health Merger

  • 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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