Beth Israel, Pathway Begin Discussing Feasibility of Merger

Would create economies of fiscal and intellectual scale, hospitals say

Boston's Beth Israel Hospital and Pathway Health Network, which includes Deaconess Hospital, have agreed to examine the feasibility of a merger between the two organizations and the establishment of a new regional network for health care, it was announced last Friday. Members of the Beth Israel and Pathway boards, administrations, and medical staffs have been holding initial exploratory discussions for several weeks, according to a statement from Beth Israel and Pathway.

The outcome under consideration would include joining the two hospitals to form a single strengthened Beth Israel/Deaconess Medical Center, affiliated with Harvard Medical School and located on their present neighboring sites in the heart of the Longwood Medical Area. Consolidation of clinical departments, administrative functions, and governance, along with substantial reduction of certain fixed costs, would create economies of intellectual and fiscal scale while enhancing both quality and efficiency of performance and service.

"I am very pleased that the careful discussions that have been ongoing for many weeks have arrived at a decision that 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 health care market is threatening academic medical centers nationwide," said Daniel C. Tosteson, Dean of the Faculty of Medicine.

The new group, yet to be formally named, "will build upon the strengths of both systems and will constitute a significant restructuring producing a vital new force in health care in Massachusetts," according to Stephen B. Kay, board chair of Beth Israel.

John Hamill, Pathway's board chair, hailed the joining of these two major Harvard-affiliated teaching hospitals as "permitting the vital changes in economics and clinical programs that will provide patients, their physicians, and their health plans with sophisticated medical care, a geographically diverse network of primary care providers, and the exceptional qualities of service and care for which Beth Israel and Deaconess are justifiably renowned."

"This cooperative relationship would help community physicians to stay at the leading edge of medical knowledge, diagnosis, and treatment, while in turn keeping the medical-center physicians in touch with and supportive of the needs of both the people in their local communities and their local physicians," said Mitchell T. Rabkin, president of Beth Israel Hospital.

"The mission of Pathway Health Network has always been to serve patients, communities, students, and science," said J. Richard Gaintner, president of Pathway Health Network. "By bringing together academic and community-based colleagues and focusing on efficacy, quality, and the cost of care, we can also add value to the health system. Collaboration will allow us best to fulfill our mission and to compete effectively in today's rapidly changing market."

The new hospital would meet the traditional responsibilities of both Beth Israel and Deaconess hospitals, providing service for their neighboring areas at all levels from primary care on-site, in nearby doctors' offices and affiliated community health centers and hospitals, to highly specialized care for complex referral cases from a wider region, which is the traditionally provided expertise of the Harvard hospitals today.

The new network of hospitals, physicians, and other health professionals throughout the region would include the Pathway Health Network institutions in addition to Deaconess Hospital: New England Baptist Hospital, Deaconess-Glover Hospital, Deaconess-Nashoba Hospital, and Deaconess-Waltham Hospital, their affiliated physicians, as well as many of the groups of community physicians related to Beth Israel. It is anticipated that others -- both hospitals and physicians -- will join and enlarge the new network further.

This more formal phase of discussions, involving "due diligence" with detailed sharing of information and knowledge about the participants, is expected to last several months.