The state yesterday officially approved the affiliation of Lahey Clinic and Northeast Health System, creating a $1.3 billion organization that will provide medical care throughout Essex and Middlesex counties and into southern New Hampshire.
The affiliation will become effective May 1 under the new name of Lahey Health System. It will include Lahey Hospital in Burlington, Beverly Hospital, Addison Gilbert Hospital in Gloucester, Lahey Clinic North in Peabody and BayRidge psychiatric hospital in Lynn.
Dr. Howard Grant, the Lahey chief executive who will lead the new organization, said yesterday that the move will strengthen both organizations and hopefully allow them to expand services.
"Our expectation is that we're going to grow as a result of our organizations coming together," he said.
The affiliation was unanimously approved by the state's public health council, a 15-member panel chaired by Massachusetts Department of Public Health Commissioner John Auerbach.
North Shore Elder Services Executive Director Paul Lanzikos, a Beverly resident who serves on the council, said the move gives North Shore residents a choice between two of the country's leading health care providers, Lahey and Partners Health Care, which includes Salem Hospital and Mass General/North Shore Center for Outpatient Care in Danvers.
"I don't know of another geographical area, never mind in Massachusetts but probably in the United States, that has the opportunity to choose from one of two world-class systems," Lanzikos said.
"You've got Partners, and you've got Lahey. You go around the country, and both of these names are highly regarded, and that's what we've got to pick from. And the fact that they're competing together will hopefully keep costs down."
The affiliation — hospital officials say it's technically not a "merger" or "acquisition" because no money exchanged hands — was generally received well at public hearings held in Beverly and Burlington in January. The largest objection came from residents of Cape Ann who are concerned about the future of Addison Gilbert Hospital.
Hospital officials had agreed to guarantee Addison Gilbert's future for at least three years, but Cape Ann residents wanted a stronger commitment.
Lanzikos said the council could not ask for a guarantee in "perpetuity" but did impose a condition that requires Lahey to assess Cape Ann's health care needs and report back to the council before any decisions are made at the end of the three-year period.
The council does not have the authority to require Lahey to keep Addison Gilbert open, Lanzikos said.
"But clearly, it's a high-level public forum from which they would have to make a good case, otherwise they would bear the risk of having negative reactions that would not be favorable to their interests in the long run," he said. "If they came back to us with a set of recommendations that weren't supported by the evidence or seemed to be shortsighted, the council would express a negative opinion."
Lanzikos added that he did not expect that to happen. He said Grant and Kenneth Hanover, the Northeast Hospital chief executive, are committed to making sure that health care is available to everyone in the region and continues to improve.
"They're not going through all this to weaken this system," Lanzikos said.
Grant said the new Lahey system is committed to allowing patients to receive care "as close to home as possible," meaning Lahey patients will be able to use Beverly Hospital and vice versa.
"If possible, we're going to try to identify ways to provide more services at Addison Gilbert, but we're going to need to make sure the physicians and the residents are going to be eager and able to support the services we would bring to that community," Grant said.
Grant said Lahey, with its history of providing tertiary care for more complicated medical problems, and Northeast, as a "superbly run" community hospital, will be able to provide a full spectrum of care for patients.
"Our two organizations fit together magnificently," he said.
Grant said that although Lahey was larger, the two organizations will govern equally under the new setup, with equal representation on the board of directors. He said that philosophy is attractive to other institutions that have already inquired about affiliating with Lahey Health Care.
Lahey Hospital, Beverly Hospital and Addison Gilbert Hospital will remain independently licensed, he said.
"The day-to-day operations don't change, but there will be great ways to figure how to develop new programs," Grant said.
Asked if there will be layoffs, Hanover said, "There likely will be some displacement of employees at some point in our process, but there are no plans to eliminate positions on day one at all."
Grant said he's hoping the organization will grow to the point where it will hire more people "because more patients in our area will be coming to us for care."
Hanover said the organization has undertaken a branding study to consider the best way to promote the new organization. The signs on buildings will not immediately change when the affiliation takes effect May 1.
Hanover said hospital officials received verbal approval for the affiliation from the attorney general's office on Monday and need no other regulatory approvals.
"We're delighted," Hanover said. "This has been a long process. We think we have been thorough in the process, and to have the regulators be as supportive as they have been is just another validation that this is the right relationship for both parties to have pursued."
Staff writer Paul Leighton can be reached at 978-338-2675 or by email at email@example.com.