Lehigh Valley Health Network and Philadelphia-based Jefferson Health announced Wednesday that their merger plans are official.
LVHN and Jefferson said they signed a definitive agreement to combine, making official a December nonbinding letter of intent to create an integrated care delivery system. Under the terms of the agreement, the systems will integrate clinical care, operations and their respective identities.
The resulting new system would result in a network with a national research university, an expanded not-for-profit health plan, 30 hospitals, more than 700 outpatient sites and more than 62,000 employees across eastern Pennsylvania and southern New Jersey. Annual revenue would be estimated between $12 billion and $14 billion.
The deal is expected to be completed this summer, pending final reviews and execution of closing conditions, according to a news release from LVHN.
“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,” said Dr. Joseph G. Cacchione, CEO of Jefferson. “Through our integrated operating model, the combined organization will provide the communities we serve access to the highest quality care, the benefits of continuous research and innovation, a network of specialists, clinical trials and so much more, while also building an organization that prioritizes health through value-based care.”
Upon the closing of the transaction, Cacchione will continue to serve as CEO of the Jefferson enterprise. Dr. Brian A. Nester, president and CEO of LVHN, will serve as executive vice president under Cacchione and as president and chief operating officer of “the legacy Lehigh Valley Health Network.” Jefferson’s Dr. Baligh R. Yehia will also serve as an executive vice president under Cacchione but will hold the roles of chief transformation officer and president of “the legacy Jefferson Health.”
The newly integrated board of trustees and leadership team will be comprised of members from both systems. Both Jefferson and LVHN will continue to operate as independent entities until the combination process ends, the health networks said.
“We at LVHN are really excited about this. It’s a manifestation of about a year’s worth of work,” Nester said Wednesday. “It started with simple conversations around managed care and what we can do to better serve Medicare and Medicaid population in our region and it evolved into this a true merger of two great organizations. We will be just as dedicated to our hometown as we always were but have even greater capabilities to serve our communities.”
LVHN and Jefferson have said that one of the biggest changes for the Lehigh Valley that will come out of the merger will be the introduction of Jefferson Health Plans, Jefferson’s noncommercial insurance marketplace. Jefferson Health plans offers Medicaid, Medicare Advantage, Affordable Care Act Marketplace and CHIP plans. The CEOs of both networks said the program would improve care for underserved populations and reduce the cost of care.
LVHN traces its start to 1899 when Allentown Hospital opened at 17th and Chew streets. The health network’s flagship location on Cedar Crest Boulevard in Salisbury Township opened in 1974 as a joint venture between Allentown and Sacred Heart hospitals. Sacred Heart later pulled out of the venture, and the medical center eventually became known as Lehigh Valley Hospital-Cedar Crest.
The ensuing decades saw massive growth for the health network, which acquired hospitals in the Poconos, Hazleton and in Schuylkill County as well as Coordinated Health, which was integrated into Lehigh Valley Orthopedic Institute. In recent years, LVHN has opened hospitals in Northampton and Carbon counties. It broke ground Wednesday afternoon on a behavioral health hospital in Hanover Township, Northampton County.
In recent years, Jefferson has acquired multiple hospitals and networks, including Abington Health in Montgomery County, Kennedy Health System in New Jersey and Einstein Healthcare Network, along with others.
