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Developing a Strategy for a Newly Formed Health System


Lahey Clinic, a nationally recognized group practice and tertiary medical center that had merged with Northeast Health and Winchester Hospital to form a suburban Boston health system to compete with the downtown Boston-based academic health systems. Lahey Health consists of five hospitals, over 700 employed physicians and over 1,200 total physicians on the medical staff, five senior care facilities, an ACO and other entities spanning the full continuum of care.


To develop a strategic plan for the merged system that would position Lahey Health for success despite strong competition in a consolidated market. Due to early implementation of health reform, Lahey’s market is considered to be the most advanced in the United States (30% of Lahey’s payment is through at-risk arrangements). The physician sector is also fairly consolidated. Blue Cross, as the dominant payor, exerts tremendous influence on the market and has moved aggressively into risk contracting.


Lahey Health contracted with Veralon at its formation in 2011 to develop a strategic plan for the new system. The strategic planning process resulted in a vision of Lahey Health as the high quality, low cost and community-based alternative to Boston health systems. Goals and strategies were developed in four areas:

  • System integration
  • Network growth
  • Physician alignment
  • Market preference

Subsequent consulting assistance to Lahey has added a fifth element dealing with more directly moving toward population health management.

Implementation has been very encouraging. The system has grown at double-digit rates over the past three years. Utilization levels are high throughout the system and efforts to redirect less complex patient away from the tertiary care center to lower cost sites closer to their residences have been successful. Lahey is particularly proud of making progress on its value proposition to deliver high quality at reasonable costs and thus succeed in its risk contracting arrangements. Development of the Lahey Clinical Performance Network (its clinically integrated network of physicians) and ACO have helped to move the system far along toward in its goal of managing population health.