The deal is expected to close this summer, pending regulatory approval.
Jefferson Health and Lehigh Valley Health Network (LVHN) are on the brink of forming one of the largest nonprofit systems in the country.
The two sides signed a definitive agreement to merge, five months after signing a non-binding letter of intent to combine, which would create a 30-hospital system with more than 700 sites of care and more than 65,000 employees in Pennsylvania and New Jersey.
Along with providing financial stability for both operators, the $14 billion merger would allow Jefferson Health to expand its health plans into the Lehigh Valley area, strengthening its insurance business.
Financial terms of the deal were not disclosed. The health systems expect the transaction to close this summer, pending final reviews and regulatory approval.
Following the merger, Jefferson CEO Joe Cacchione will continue at the helm, while Lehigh Valley’s CEO Brian Nester will report directly to Cacchione as the executive vice president and chief operating officer of the new system, as well as president of the legacy LHVN.
“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,” Cacchione said in the news release. “This combination represents access, choice, innovation, opportunity, increased equity and stability – for patients, physicians, faculty, staff, students and health plan members and our communities at large.”
Jefferson Health has grown significantly in the past decade, expanding from three hospitals in 2015 to currently 18, thanks to a series of acquisitions.
In January 2023, the system announced reorganization efforts to restructure from five regional divisions into three with the aim of increasing efficiency. In July, Cacchione said the operator would reduce its workforce by about 400 positions, or approximately 1%.
Meanwhile, Lehigh Valley said it would cut approximately 240 positions last October as part of restructuring.
It’s unclear if any layoffs will take place following the merger.
Jefferson Health reported $30.5 million in operating loss for the nine months that ended March 31, compared to a $117.5 million loss over the same period in 2023.
Lehigh Valley reported an $11.1 million operating loss in the span this year and a $52.2 million loss for last year.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
A definitive merger agreement has been signed by Jefferson Health and Lehigh Valley Health Network, five months after the operators signed a non-binding letter of intent to combine.
The ensuing nonprofit system would consist of 30 hospitals across Pennsylvania and New Jersey, while enabling Jefferson Health to expand its health plans into Lehigh Valley.