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Jefferson Health and Einstein Healthcare Network have completed their merger to form an 18-hospital not-for-profit system with more than $7 billion in annual revenue.
The deal, which was proposed in 2018, overcame challenges from state and federal authorities after a federal judge dismissed regulators’ claims that it would stifle competition and inflate prices. Jefferson Health now owns three acute-care hospitals and MossRehab, which specializes in brain and spinal cord injuries, similar to Jefferson Health’s Magee Rehabilitation Hospital. The two health systems announced the final merger Monday.
The combined entity has the most residents and fellows of any health system in the Philadelphia metropolitan area, executives said. Einstein Healthcare President and CEO Ken Levitan will retain his titles at the merged system and become executive vice president at Jefferson Health. Dr. Stephen Klasko will remain CEO of Jefferson Health.
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“The culmination of the multiyear process of bringing two great organizations with more than 300 combined years of service, clinical excellence and academic expertise is not just a merger. Einstein and the new Jefferson together represent an opportunity for the Philadelphia region to creatively construct a reimagining of healthcare, education, discovery, equity and innovation that will have national and international reverberations,” Klasko, who also is president of Thomas Jefferson University, said in a news release.
Here are five takeaways from the transaction:
1. The Federal Trade Commission and Pennsylvania Attorney General Josh Shapiro (D) sued to block the merger last year on the grounds that the combined entity would control at least 60% of the inpatient acute care market in North Philadelphia. But federal and state regulators failed to prove that insurers wouldn’t be able to find viable substitutes for the merged system to avoid any price increases a merged Jefferson-Einstein might demand, federal Judge Gerald Pappert of the Eastern District of Pennsylvania wrote in his ruling. The regulators erred in their definition of the acute care geographic market, Papper wrote.
2. Regulators declined to appeal after Jefferson Health and Einstein Healthcare amended their merger proposal. The two companies committed to permanently maintaining Einstein Philadelphia Medical Center as a general acute-care hospital with affiliations to area academic institutions, Shapiro’s office said in January. The health systems also pledged to preserve access to critical healthcare services and to invest $200 million into their facilities.
3. Their combined footprint of more than 50 outpatient and urgent-care centers, rehabilitation sites and post-acute facilities will allow the health system to care for more people closer to home, executives said. The systems plan to bundle purchasing, coordinate care at their transplant and rehabilitation centers, and grow their telehealth network, among other initiatives.
4. Reading, Pennsylvania-based Tower Health is restructuring, which could boost Jefferson Health’s market share. Tower Health plans to sell Chestnut Hill Hospital in Philadelphia and more than a dozen urgent care centers to Trinity Health Mid-Atlantic and close Jennersville Hospital in West Grove, Pennsylvania, by the start of next year.
5. Both systems rebounded this year after posting operating losses in 2020. Jefferson Health reported a $5.9 million in operating income for the fiscal year that ended June 30, which included a one-time goodwill impairment charge, after recording a $459.4 million operating loss last year, according to its unaudited annual financial statement. Einstein Healthcare reported $40.2 million in operating income, an increase from 2020’s $4.2 million operating loss. Jefferson Health and Einstein Healthcare had $5.66 billion and $1.43 billion in annual revenue in 2021, respectively. Last year, the COVID-19 pandemic derailed Jefferson Health’s plans to acquire Fox Chase Cancer Center in Philadelphia from Temple University, which would’ve included Temple’s interest in Health Partners Plans.
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