Dive Brief:
- Jefferson Health and Einstein Healthcare Network have signed a nonbinding letter of intent to merge.
- The deal, if finalized, would add three hospitals to Jefferson's 14-hospital system, which includes nearly 50 outpatient, imaging and urgent care facilities. It would also create one of the largest residency programs in the Philadelphia region.
- The Einstein deal would be the sixth acquisition by Jefferson Health since Stephen Klasko became CEO in 2013, according to Philly.com, which noted the Einstein acquisition would create a system with nearly $6 billion in revenue.
Dive Insight:
More than 560 hospital mergers have occurred since 2010.
The reasoning behind the deals can differ. Some are merging to consolidate market power to better negotiate rates with payers as providers face waning admissions and rising expenses.
Jefferson Health wants to build its brand and market power in the Pennsylvania area.
It acquired Abington Health in 2015, Aria in 2016 and New Jersey's Kennedy Health in 2017. The moves have blown out the number of hospitals under Jefferson's brand from three to 14 since 2015.
Regional market plays are a strategy many health systems and operators are deploying. Instead of scaling with a hospital or two scattered throughout multiple states, providers are looking to deepen their pockets by exploring regions they find valuable.
The Philadelphia population has grown 2.2% from 2010 to 2016 and experienced a 5% birth rate in the last year. Neighboring Camden, New Jersey, experienced a 9% birth rate during the same time period.
Einstein Medical Center Philadelphia is the largest independent academic medical center in the region, and the organization trains more than 3,500 health professional students and 400 residents in more than 30 programs each year.
The two systems will sign a definitive agreement to merge if they chose to do so after a period of due diligence.