Harvard Hospitals Plan To Merge

Two of Harvard's major teaching hospitals, Beth Israel and Deaconess, have announced plans to merge into a combined health care network.

The merger of Beth Israel Hospital and Pathways Health Network, the parent company of Deaconess Hospital, would create the area's second giant hospital conglomerate, to be named the Beth Israel/Deaconess Medical Center.

The Beth Israel/Deaconess Medical Center would employ more than 1,200 doctors and have revenues of nearly $1 billion.

The merger comes just two years after the December 1993 merger between Massachusetts General and Brigham & Women's hospitals, two other Harvard teaching hospitals, which created the $1.8 billion Partners HealthCare System, Inc.

The new medical center, which will be located at the hospitals' neighboring sites in the Boston Longwood medical area, will continue to serve as a teaching hospital for Harvard Medical School.

The merger, announced Friday, was prompted by the increasing competition in the health care industry and by a desire on the part of both hospitals to cut costs, according to Erin Martin, a spokesperson for Deaconess.

"It has become harder and harder to provide quality heath care and maintain costs," Martin said. "One solution for us is to team up."

According to Martin, the combination of the two hospitals would create "economies of scale," allowing both hospitals to cut costs in a variety of ways, including bulk buying of supplies.

Martin said this merger was not specifically a response to the 1993 merger, but that it was "part of a trend which is taking place in our region."

"This merger will make us a major player," Martin said.

In a statement regarding the merger, Daniel C. Tosteson '44, dean of the Medical School, said he was pleased with the combination of the two hospitals.

"[The merger] will dramatically strengthen the ability of the Harvard Faculty of Medicine to fulfill its triple mission of research, education and patient care at a time when the healthcare market is threatening academic medical centers nationwide," Tosteson said in a statement.

Another impetus for the merger, according to Martin, was the potential to combine the different strengths of the two hospitals.

Deaconess boasts strong gastroenterology, cardiology and psychiatry services, while Beth Israel is recognized for its obstetrics, as well as its extensive primary care network.

The merger would consolidate the two hospitals' administrations by having one board of trustees, headed by Mitchell T. Rabkin '51, currently president of Beth Israel.

J. Richard Gaintner, the chief executive of Pathways Health Network, the parent company of Deaconess hospital, will serve as president and second-in-command of the new entity.

"This is very serious," Gaintner told the Boston Globe. "There does not appear to us to be any deal-breakers."

Rabkin told the Globe the combined hospitals will lower their operating costs by millions of dollars by sharing costs and splitting administrative expenses.

Staff reductions at both hospitals are expected in the near future, but Rabkin said they will rely on attrition, rather than layoffs, to pare down the number of employees.

This merger is unusual because the new medical center will be organized around areas of care such as women's health and heart disease, rather than traditional disciplines such as surgery, Rabkin told the Globe.

Both Beth Israel and Deaconess have spurned merger attempts with other hospitals in the recent past.

A deal between Deaconess and New England Medical Center, a Tufts teaching hospital, fell through last year.

Beth Israel also conducted unsuccessful merger talks with the Lahey Clinic

Rabkin told the Globe the combined hospitals will lower their operating costs by millions of dollars by sharing costs and splitting administrative expenses.

Staff reductions at both hospitals are expected in the near future, but Rabkin said they will rely on attrition, rather than layoffs, to pare down the number of employees.

This merger is unusual because the new medical center will be organized around areas of care such as women's health and heart disease, rather than traditional disciplines such as surgery, Rabkin told the Globe.

Both Beth Israel and Deaconess have spurned merger attempts with other hospitals in the recent past.

A deal between Deaconess and New England Medical Center, a Tufts teaching hospital, fell through last year.

Beth Israel also conducted unsuccessful merger talks with the Lahey Clinic