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BIDMC, Lahey pitch their merger proposal
Say move would help lower state’s high health care costs
By Priyanka Dayal McCluskey
Globe Staff

The chief executives of Beth Israel Deaconess Medical Center and Lahey Health on Wednesday pitched their proposed merger as an antidote to the state’s high health care costs, arguing that coming together would allow them to grab market share from pricier hospitals.

In their first sit-down interviews with The Boston Globe since going public with their merger negotiations nearly two months ago, Dr. Howard R. Grant of Lahey and Dr. Kevin Tabb of Beth Israel Deaconess said the deal would also help them weather coming changes in the health care market, including shrinking reimbursements from insurers and the government, and changes to federal health care policy.

The US House is scheduled to vote Thursday on a sweeping bill that would unravel big pieces of President Barack Obama’s 2010 health care law.

Massachusetts has among the highest health care costs in the nation, a fact that Grant and Tabb reiterated during a meeting with the Globe’s editorial board.

Both executives have worked in other states, where they saw quality health care being provided at lower costs than in Massachusetts, they said.

“There is great care that is provided in Massachusetts and Boston . . . but it is inordinately expensive,’’ Tabb said. “Any claim otherwise just isn’t true.’’

The CEOs said their combined new health system would pull patients away from other higher-cost competitors, and that each percentage point of market share they gain would cut $18 million from state medical spending.

“We think it’s exactly what the marketplace is demanding,’’ Grant said.

Patients in Massachusetts often go to higher-cost academic medical centers for care that can be provided in less expensive community hospitals, contributing to higher medical spending, according to state reports.

Tabb and Grant said they’ve worked to counter this trend by keeping patients in community hospitals when possible.

The two hospital leaders have been discussing a combination on and off for years. In January, they signed a letter of intent to merge, the preliminary step in the process.

They are still negotiating details of their agreement and have yet to submit plans to state officials who must review the transaction.

Boston-based Beth Israel Deaconess and Burlington-based Lahey would together have eight hospitals and $4.5 billion in annual revenue, creating the second-biggest health system in the state by revenue after Partners HealthCare, the parent of Massachusetts General and Brigham and Women’s hospitals.

Tabb has been selected to run the combined system, while Grant plans to step down when and if the deal is completed.

“We’ve received a fair amount of quiet encouragement on this — more than I expected — from a variety of different players,’’ Tabb said.

The CEOs indicated they would press on with the deal regardless of impending policy changes that could disrupt the health care industry.

“Institutions that are going to weather this storm better figure it out now and not wait to get to a point where you’re really in trouble,’’ Tabb said.

“We feel a real sense of urgency not because we are in trouble now but because we look at what’s coming nationally . . . . Both of us are pretty clear that now is the time to make that move.’’

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey @globe.com. Follow her on Twitter @priyanka_dayal.