Boston’s Concentrated Market Keeps State Regulators Busy with Merger Scrutiny
December 14, 2020
Conditions placed on the merger that formed the Boston area’s second-largest health system—Beth Israel Lahey Health—are the latest in a series of strict state oversight actions that will shape large regional health system deals for years to come.
State attorneys general have placed stringent conditions on recent transactions that significantly consolidated healthcare services to try to level the competitive playing field. Pricing, access and quality guardrails imposed by state authorities, coupled with state legislation, are expected to ratchet up regulation of these regional tie-ups.
Regulators also required Beth Israel Lahey to coordinate services with its safety-net hospital affiliates—Lawrence General Hospital, Cambridge Health Alliance and Signature Healthcare Brockton Hospital—and boost access to mental health and substance use disorder treatment across the system. Beth Israel Lahey must continue to financially support its safety-net affiliates and community health centers, increase access in underserved communities, maintain historical service levels, and not limit the number of patients it serves from MassHealth—a combination of the state’s Medicaid and Children’s Health Insurance Program beneficiaries—among other conditions.
The resolution requires 10 years of third-party oversight to ensure compliance. Notably, there are certain triggers like significant swings in inflation that could spur a renegotiation.
“Something like this deal represents a reassertion of authority in the antitrust space,” said Mark Ustin, a regulatory lawyer and partner at Farrell Fritz, adding that the recent focus on value-based care has caused antitrust authorities to take a bit of a backseat. “This settlement supports other policy goals that other AGs may look to see if they can replicate in their states.”
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