Cambridge Health Alliance, which has been seeking a partnership with a financially stronger hospital system for two years, said Tuesday that it has entered exclusive talks with Beth Israel Deaconess Medical Center in Boston about a potential affiliation.
In a statement, Cambridge Health Alliance chief executive Patrick Wardell said his hospital group has signed a letter of intent “to investigate clinical, academic and strategic affiliations that could enhance care provided by both institutions.” Wardell said negotiations would take place over the next few months. Even if an agreement is struck, he said, “it will not result in a merger or acquisition nor will it impact CHA’s status as a public health care provider.”
Cambridge Health Alliance operates city-owned Cambridge Hospital as well as Somerville Hospital and Whidden Memorial Hospital in Everett. All of them are so-called safety net hospitals, meaning they treat large numbers of low-income patients. While it receives federal money under a Medicaid waiver program, Cambridge Health Alliance posted a $8.5 million loss in the 2011 fiscal year, according to data from the state Division of Health Care Finance and Policy.
Kevin Tabb, chief executive of Harvard-affiliated Beth Israel Deaconess, said in a statement that the potential affiliation with Cambridge Health Alliance “will enable us to meet the challenge of providing the highest quality medical care in a coordinated way that is best for patients.”
Tabb and Wardell declined to discuss the talks and their envisioned alliance beyond their statements, spokesmen for the two hospital systems said.
The prospective affiliation is part of a broader wave of consolidation among Massachusetts hospitals and physicians groups as the health care market moves to “accountable care organizations,” networks of providers that offer integrated care to patients and negotiate jointly with commercial health plans and government payers for reimbursements.
Ellen Lutch Bender, president of Newton health care consulting firm Bender Strategies, said Cambridge Health Alliance and Beth Israel Deaconess are “both doing what they need to do” to adapt to a changing market.
“In the current health care economics, I’m unaware of any community-based institution that feels it can move forward without affiliating with an academic medical center,” Bender said. “Similarly, in the new health care paradigm, academic medical centers must align with community-based hospitals to provide high-quality health care at low cost.”
Beth Israel Deaconess, which reported a $62.2 million profit last year, owns community hospitals in Needham and Milton. It has an affiliation with Atrius Health, a Newton-based alliance of six nonprofit physician groups, including Harvard Vanguard Medical Associates. It also has preferred provider agreements with Joslin Diabetes Center and Hebrew Senior Life, and clinical affiliations with Lawrence General Hospital and Anna Jaques in Newburyport.
Over the summer, Beth Israel Deaconess began exclusive talks with Signature Healthcare in Brockton—the owner of Brockton Hospital—about a clinical relationship, a move that would result in Signature dropping its two-year-old partnership with Tufts Medical Center.
Many doctors at Cambridge Health Alliance hospitals have ties to Mount Auburn Hospital in Cambridge. Those arrangements would not be disrupted by an affiliation between Cambridge Health and Beth Israel Deaconess, according to the statement from Tabb.