Jefferson Health, Lehigh Valley Health Network move closer to merger

Jefferson Health and the Lehigh Valley Health Network have taken another big step toward joining forces.

Jefferson Health and the Lehigh Valley Health Network have signed an agreement to come together. The merged organization would operate 30 hospitals in eastern Pennsylvania, including Philadelphia, and in New Jersey.

The two Pennsylvania health systems said this week that they have signed a definitive agreement to come together. Jefferson announced plans to acquire Lehigh Valley in December 2023.

When the deal is finalized, the merged organization would become one of the 15 largest nonprofit hospital systems in America, Jefferson said. The deal is expected to close this summer, the systems said.

Jefferson is based in Philadelphia and operates 17 hospitals and over 50 outpatient care locations throughout the Philadelphia region and in southern New Jersey. Lehigh Valley is based in Allentown, about an hour from Philadelphia, and serves much of northeastern Pennsylvania. Lehigh Valley operates 13 hospitals and other healthcare sites.

Joseph Cacchione, MD, CEO of Jefferson, said in a statement that the merger would improve “access, choice, innovation, opportunity, increased equity and stability.” Cacchione also said the merged organization would offer more opportunities for specialty care and clinical research.

“We are delighted to take this next step toward combining with Lehigh Valley Health Network-it is the future, not only for our organizations but also for care in our region,” Cacchione said in a statement.

Brian Nester, president and CEO of the Lehigh Valley Health Network, said Jefferson is the right partner.

“We could not be more excited about what lies ahead for communities across eastern Pennsylvania and southern New Jersey,” Nester said in a statement. “As our collective teams worked these past months, we confirmed what we had believed to be true when we signed our initial letter of intent—Jefferson is the ideal partner for Lehigh Valley Health Network, our teams and our patients.”

When the consolidation occurs, Cacchione will serve as the CEO of the merged organization. Nester would serve as executive vice president and chief operating officer, as well as president of the Lehigh Valley Health Network. Baligh Yehia would serve as executive vice president and chief transformation officer, and president of Jefferson Health.

The governing board of the merged system would include representatives from Jefferson and Lehigh Valley.

Jefferson has grown in recent years, but the health system has posted losses in each of the past two years, according to WHYY. Jefferson reported a $78.5 million loss for the fiscal year ending June 30, 2023, which was down from a $125.8 million loss in the previous year, according to financial statements.

Jefferson and Lehigh Valley will operate independently until the deal closes.

Pennsylvania has seen a couple of other hospital deals in recent months.

The University of Pennsylvania Health System announced in January that it plans to acquire Doylestown Health, a provider in the Philadelphia suburbs. Doylestown would become a part of Penn Medicine when the deal is complete. Penn Medicine, based in Philadelphia, has been expanding in counties beyond the city in recent years.

WellSpan Health, based in central Pennsylvania, plans to acquire Evangelical Community Hospital, a 131-bed hospital, and its associated clinics and outpatient locations. The hospital is based in Lewisburg, a community about 60 miles north of Harrisburg.

In April, Kaiser Permanente’s subsidiary, Risant Health, completed the acquisition of Geisinger in central Pennsylvania.

More hospital mergers have been occurring in recent months, and hospital analysts say they expect to see more deals taking place throughout the year. Analysts say some deals are being driven by hospitals in financial distress looking for partners.

In 2023, there were 65 announced hospital mergers and acquisitions, up from 53 the year before.