It's rare when a rural Pennsylvania health system issues a press release with instructions for tapping into a news conference broadcast via satellite. Especially when there's no hint what the event will be about.
Rarer still is when an academic medical center a few counties away puts out a nearly identical release an hour later touting its own broadcast press event.
But those notices were the first public inklings of the proposed merger between Geisinger Health System and Penn State University Hospital-Milton S. Hershey Medical Center unveiled on Jan. 17.
Danville, Pa.-based Geisinger and Hershey (Pa.) Medical Center plan to link under the name Penn State Geisinger Health System. Their union would form a physician-led health system with annual clinical revenues of about $1 billion, 1,345 licensed beds at three hospitals, and a geographic reach that would span 40 counties throughout central and northeastern Pennsylvania.
At almost 1,000 doctors, the institutions' combined physican practices would rank third largest in the state.
Geisinger stands to gain by adding a nationally prominent academic medical center to its already formidable arsenal of two hospitals, a 200,000-enrollee HMO and a multispecialty medical group with 559 staff doctors.
For Hershey, there's the promise of tapping into a larger feeder network of primary-care physicians and greater financial stability.
Both partners cited the inexorable rise of managed care in the state as an important catalyst.
"In the near future, most healthcare in Pennsylvania will be provided by the four or five largest systems as organizations consolidate," said Stuart Heydt, M.D., chief executive officer of Geisinger. "This merger ensures that a Pennsylvania system, led by physicians and dedicated to quality care, will be one of the survivors."
Thriving is important, too. And for Hershey, teaming with a not-for-profit system with its own HMO was more appealing than being attached to an investor-owned alternative.
"Would a for-profit HMO be willing to partner with an academic medical center and return a significant portion of earnings to funding a medical center? The answer is no," said C. McCollister Evarts, M.D., Hershey's CEO.
Final details of the deal, expected to close by July, have to be hammered out. As a merger of operations, Hershey's assets would not be transferred to the new system. Also, Penn State will retain ownership and continue to direct the operations of its College of Medicine, although the college will be closely affiliated with the new system, both parties said.