Hospital Merger Passes Final Regulatory Hurdles

BOSTON, MA -- A proposed merger between Beth Israel Deaconess Medical Center, Lahey Health and three other health systems cleared the final state and regulatory hurdles Thursday, paving the way for a deal first announced two years ago. Once finalized, the merger will create the state's second-largest healthcare system after Partners HealthCare.

Massachusetts Attorney General Maura Healey said her office would not sue to block the merger that would form Beth Israel Lahey Health System, but she would place certain restriction on the deal. The restrictions include what Healey called an "unprecedented" seven-year cap on prices charged by the combined system.

Also on Thursday, the U.S. Federal Trade Commission said it had decided not to file suit to block the merger. In a statement, the agency described the decision as a "close call."

The Health Policy Commission had projected that the merger could increase healthcare costs by $1.2 billion. Healey's restrictions, which set a benchmark for increases at Beth Israel Lahey, are aimed at preventing that. The benchmark, which fluctuates, is currently 3.1 percent. Beth Israel Lahey also agreed to invest $54.7 million in affiliated hospitals and community health centers that care for low-income patients.

The impact of the merger would be felt throughout greater Boston. In addition to its hospital and medical center in Burlington, Lahey operates Beverly Hospital, which has a staff of more than 600 physicians and a service area covering 13 communities. According to state data, Lahey Medical Center in Peabody is the city's 10th-largest employer and has between 250 and 500 employees.

Lahey Medical Center in Peabody has 243 practicing physicians across 46 specialties. The center serves more than 800 outpatients each day and includes a 10-bed hospital. It's not clear what impact the merger would have on staffing or patient services at Lahey Medical Center in Peabody or Beverly Hospital.

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Photo of Lahey Hospital & Medical Center in Burlington by Dave Copeland/Patch.

Dave Copeland can be reached at dave.copeland@patch.com or by calling 617-433-7851. Follow him on Twitter (@CopeWrites) and Facebook (/copewrites).