The boards of Einstein Healthcare Network and Jefferson Health, both based in Philadelphia, have approved a definitive agreement for the two nonprofit academic medical centers (AMCs) to merge, the health systems announced Friday, Alex Kacik reports for Modern Healthcare.
The merger is subject to state and federal regulatory approval.
Two Philadelphia AMCs
Jefferson is a $5 billion 14-hospital system with over 50 outpatient and urgent-care centers and the Sidney Kimmel Cancer Center. Einstein Medical Center Philadelphia has 12 outpatient-care centers and a network of more than 700 primary-care physicians. Einstein Medical Center Philadelphia trains 3,500 medical students, making it the largest independent AMC in the Philadelphia area.
The merged hospital system would have 18 hospitals, more than 50 outpatient and urgent-care locations, and rehabilitation and post-acute facilities with an estimated revenue of $5.9 billion. The combined health system would have 39,000 employees and 2,000 medical residents and fellows, the most in the region, Kacik reports.
The organizations did not give a timeline for the merger's completion.
Merger could help fight health inequity
Stephen Klasko, president of Thomas Jefferson University and CEO of Jefferson Health, pointed to the merger's potential to help fight health inequity in Philadelphia. He said, "Philadelphia has some of the largest health inequities and is home to six academic medical centers, so something needs to change."
The executives of the organizations also said they hope to combine academic functions to educate fellows and residents on the importance of bringing "compassion to care delivery," Kacik reports. Klasko said the next generation of physicians "need to be self-aware, empathetic and culturally competent. That's a differentiating factor to choose us."
There's a potential for savings
If the merger is approved, consultants said Einstein Health and Jefferson should see 2% to 5% in cost savings—which could offset the cost of the integration.
The systems intend to use bundled purchasing to create more cost effective contracts, coordinate transplant and rehabilitation care, and grow their telehealth networks, Kacik reports.
In addition, leaders from both health systems said the merger would allow the organizations to care for patients in settings that are less costly than hospitals (Kacik, Modern Healthcare, 9/14).
Next, learn how mega-mergers could impact your organization
Health care mergers and acquisitions are hardly new, but many recent transactions involve vertical integration: new-in-kind combinations of major players resulting in unprecedented scale and scope.
Use this research report to plan for integrators' possible moves, forecast potential effects on your organization, and create a plan to defend against or capitalize on the changes.