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In July 2017, five Eastern Massachusetts-based health systems signed a letter of intent to merge: Lahey Health, Beth Israel Deaconess Medical Center, Mount Auburn Hospital, New England Baptist Hospital, and Seacoast Regional Health System. The parties’ affiliated contracting networks subsequently joined the merger as well. The transaction was designed to create the second-largest health system in Massachusetts with $4 billion in revenue, 10 hospitals, and over 4,000 physicians.

The parties retained NERA to evaluate the potential competitive effects of the transaction and assist the parties’ outside counsel, Goodwin Procter, during engagement with the FTC and state agencies, including the Massachusetts Health Policy Commission. A NERA team led by Associate Director Dr. Subbu Ramanarayanan and Consultant Dr. Emily Walden undertook economic analyses examining competition in the Massachusetts healthcare market using data from the parties and state agencies. NERA worked with counsel in engagement with the FTC economists and attorneys to address competitive concerns raised by the FTC through multiple submissions and presentations and supported the parties in their response to the FTC’s Request for Additional Information, or “Second Request.”  Dr. Ramanarayanan provided deposition testimony pertaining to projected efficiencies arising from the merger as part of the FTC’s investigational hearings.

Over the course of the engagement, NERA worked closely with the team from Goodwin Procter, including Partners Andrea Agathoklis Murino and Paul Jin, and Associates Matthew Wheatley, and Brian Desmarais.

In November 2018, the parties reached a settlement agreement with the Massachusetts Attorney General’s Office that allowed the parties to proceed with the merger in exchange for commitments from the parties to restrict price increases and increase spending to improve healthcare access for low-income communities. The same day, the FTC concluded its investigation without taking any action. The parties expect to close the transaction in the first quarter of 2019.