Jefferson Health and Einstein Healthcare to merge

Jefferson Health and Einstein Healthcare Network have signed a letter of intent to merge, which would create the largest residency program in the Philadelphia area.

Jefferson has grown from a three-hospital academic medical center anchored in Philadelphia to a 14-hospital system with about $5 billion in annual revenue. It has been incrementally growing its network over the past several years through partnerships with Abington in the Pennsylvania suburbs, Aria Health in the Philadelphia region, Magee Rehabilitation also in Philadelphia, Kennedy in New Jersey and Philadelphia University. It now has more than more than 50 outpatient and urgent-care locations, the Sidney Kimmel Cancer Center and a telemedicine program.

Einstein Medical Center Philadelphia is the largest independent academic medical center in the Philadelphia area and trains more than 3,500 medical students and 400 residents. Einstein also provides a range of healthcare services through skilled-nursing and rehabilitation centers that closely align with Jefferson, 12 outpatient-care centers, and a network of more than 700 primary-care physicians and specialists throughout the region.

Both organizations have been working together for more than two decades.

"What will make providers like us successful financially, operationally and in the patient's mind is providing care where they are," said Dr. Stephen Klasko, the CEO of Thomas Jefferson University and Jefferson Health. "That might mean we operate fewer hospital beds, but when you look at the healthcare ecosystem, there is a need to transform."

More health systems are forming these types of regional hubs that allow them to spread rising costs over a wider patient base and control more parts of the care continuum, which makes them more attractive to suppliers and payers. Getting a handle on regional demographic data can also help them hone their clinical operations.

For a smaller academic medical center like Einstein, where more than 80% of its medical center patients are covered by government-sponsored insurance, these types of partnerships are necessary to remain viable, said Barry Freedman, president and CEO of Einstein.

"Jefferson has a much healthier balance sheet and it provides opportunity for growth and expansion that are currently outside Einstein's reach," he said.