Jefferson Health recently made headlines with its announcement of an integration with Lehigh Valley Health System (LVHS) that could potentially double its insurance business within the next two years. Jefferson Health’s Merger with Lehigh Valley Health System: Doubling the Insurance Business in 2 Years. The executives of Jefferson Health shared the details of this strategic move during their presentation at the prestigious J.P. Morgan Healthcare Conference. Initially, the two nonprofit organizations were exploring a white-label plan for Jefferson’s government-focused health plan in Pennsylvania’s Lehigh Valley area. However, the discussion quickly shifted to the possibility of a full asset merger, which would allow Jefferson to achieve its projected five-year growth in the health plan within a much shorter timeframe.
Exploring the Merger Opportunity
Joe Cacchione, M.D., the CEO of Jefferson Health, revealed that LVHS had been in the market previously, and by pursuing the merger, they believe they can expedite the growth of the health plan. This integration not only provides Jefferson Health with an opportunity to enter a new market but also aligns their payer business with LVHS’ care delivery services. The strategic vision behind this merger is to increase resiliency and strengthen the insurance aspect of Jefferson Health’s operations, which currently accounts for only 6% of the organization’s revenue mix.
Doubling Down on Insurance
Jefferson Health’s executives expressed their intention to double both the health plan’s revenue and the number of covered lives within the next five years. Mark Whalen, the Executive Vice President and Enterprise Chief Strategy and Administrative Officer, emphasized that the insurance business would serve as an important growth lever for all of Jefferson’s dealings in the coming years. By integrating care delivery and financing, they aim to invest in initiatives that have the biggest impact on their patients and eliminate any redundancies or waste that may arise when both sides are not aligned.
Protecting Against Disruptions
The COVID-19 pandemic served as a wake-up call for healthcare organizations worldwide, highlighting the vulnerability of fee-for-service models. Cacchione stressed the importance of diversifying revenue sources to protect against unexpected disruptions like the one caused by the pandemic. By expanding their insurance business, Jefferson Health aims to reduce its reliance on fee-for-service and become more resilient in the face of future uncertainties.
Focus on Governmental Programs
In the immediate future, Jefferson Health plans to concentrate its growth efforts within its governmental program expertise. Specifically, they intend to expand their presence in Medicare Advantage and the exchange markets before delving deeper into the commercial sector. This approach aligns with their strategy of leveraging existing strengths and gradually diversifying into other areas.
Integration with LVHN
Jefferson Health is approaching the potential integration with LVHS with the “muscle memory” gained from previous mergers. As they work to rationalize their current footprint and streamline their assets, they will also focus on connecting their offerings with LVHN’s more traditional service lines. The aim is to optimize the combined strengths of both organizations and ensure a seamless transition for patients and providers.
Expanding the Ambulatory Footprint
Apart from the merger, Jefferson Health has plans to expand its presence beyond the hospital setting. Like many other nonprofit systems, they recognize the need to grow their ambulatory footprint strategically. Their focus will be on underpenetrated areas in Southeast Pennsylvania and South Jersey, where they aim to invest in clinical programs that align with their growth objectives.
Conclusion
The integration between Jefferson Health and Lehigh Valley Health System presents a significant opportunity for both organizations to enhance their capabilities and achieve their respective goals. By merging their assets and aligning their payer and care delivery services, Jefferson Health aims to double its insurance business within two years. This strategic move not only diversifies their revenue sources but also strengthens their resilience against future disruptions. With a focus on governmental programs and an expansion of their ambulatory footprint, Jefferson Health is poised for continued growth and success in the ever-evolving healthcare landscape.