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The State Attorney General's Office and the Department of Public Health said on Thursday they were drafting the conditions for the biggest merger in the health sector in Massachusetts for decades.
Comments from the three public bodies indicated that almost two years after it was first proposed, a merger between Beth Israel Deaconess Medical Center and Lahey Health could soon be approved – but with railings.
The Health Policy Commission, which plays a supervisory role, said Thursday that the deal would give hospitals the power to demand higher prices for their services – increasing health spending by at least $ 128.4 million to $ 170.8 million for inpatients, outpatients and adult primary care services. Spending on other medical services could increase from $ 29.8 million to $ 59.7 million a year, according to a new report.
Commissioners referred their findings to Attorney General Maura Healey's office and asked Healey to develop "strong and enforceable" measures that hospitals can take to alleviate concerns over higher costs. The hospitals need Healey's approval before they can merge.
In a statement released Thursday, a spokeswoman for Healey said, "We share [the commission’s] and are currently engaged in ongoing discussions with BI-Lahey representatives on enforceable conditions to address cost and access concerns, particularly for low-income communities and communities of color.
The Health Policy Commission also asked the Department of Public Health to reconsider its approval of the merger, which was granted in April prior to the publication of any cost estimates. DPH officials said on Thursday that they will review the issue on October 10.
"This review will include evaluating the impact of the project on the value of public health, access to care and quality of care," said DPH spokesperson Ann Scales in a statement.
The Health Policy Commission is responsible for studying hospital mergers but can not block them. It may refer its findings to other officials with a larger regulator.
"The question is," Does the merger serve the Commonwealth? "The answer is no – not yet," said Dr. Donald Berwick, a member of the commission, at a public meeting on Thursday.
"The costs will increase. They will increase considerably, "he said. "We need a form of restraint."
Partners HealthCare, the largest and most expensive health care network in the state, including hospitals in Massachusetts, Brigham and Women, is on the agenda.
Beth Israel Deaconess and Lahey argue that their merger would create a quality, low-cost alternative for partners. The agreement with 13 hospitals also includes Mount Auburn, New England Baptist and Anna Jaques Hospitals.
Commissioner David Cutler said the proposed merger could result in a different set of results.
"This could be an absolutely wonderful transaction for the Commonwealth by stimulating competition and reducing costs," he said. "It could be a terrible transaction for the Commonwealth … leading to two systems with high prices and all the others fighting even more."
The cost estimates released on Thursday are similar to figures in a preliminary report released by the Commission in July. Beth Israel Deaconess and Lahey officials rejected these initial cost estimates, criticizing the formula used to calculate the projections and calling the figures "deceptive and incendiary".
Hospital officials have presented a lengthy rebuttal, but the commission still has not been convinced.
"The parties have refused to offer commitments to limit future price increases," said the commission's new report.
The report states that hospitals overestimated the savings resulting from their merger and did not provide new information to alter the commission's expectation that the transaction would significantly increase costs.
If the merger is complete, the new Beth Israel-Lahey system would have a similar market share to Partners.
Critics, including rival hospital systems, have argued that a great new Beth Israel-Lahey system would draw patients from community hospitals already in trouble. They also raised concerns about the relatively small proportion of poor patients served by Beth Israel Deaconess and Lahey.
"The HPC's final report confirms our worst fears that this Mega Merger is hurting communities of color and raising prices for Massachusetts patients," said Hanoi Reyes, spokesperson for the Make Healthcare Affordable Coalition. The coalition opposes the merger.
Beth Israel CEO Deaconess, Dr. Kevin Tabb, told the Globe Thursday that hospital officials will continue to work with regulators to ease concerns over the deal.
"We believe that in the end, these concerns, while rational and legitimate, can be resolved … before we can come together and do something that we believe will be better for everyone in the world. Commonwealth, "he said.
Priyanka Dayal McCluskey can be contacted at [email protected]. Follow her on Twitter @priyanka_dayal.
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