Tuesday’s announcement that Lehigh Valley Health Network and Philadelphia-based Jefferson Health plan to merge has the potential to disrupt health care throughout the region.
If the merger goes through, it would be the second largest health network in the state after UPMC in western Pennsylvania. It will include a national research university, an expanded nonprofit health plan, 30 hospitals, more than 700 outpatient facilities, and more than 62,000 faculty, clinicians and staff throughout eastern Pennsylvania and southern New Jersey. Staff included. Annual revenue is estimated at $12 billion to $14 billion.
But what impact will integration actually have? To find out, Morning Call spoke with Chad Meyerhofer, a Lehigh University economics professor and expert on the business of health care.
Meyerhofers said the merger is likely to proceed without major opposition from regulators because LVHN and Jefferson do not compete in the same geographic health care market.
Should all go smoothly, LVHN and Jefferson expect that obtaining regulatory approvals will take no more than a year.
But that doesn’t mean changes will be seen immediately, Meyerhofer said.
These health systems are huge. It’s like driving an aircraft carrier. If you want to change direction it has to happen slowly, he said. It will take some time for this merger to be approved and then more time for these health systems to actually begin integrating into the two entities.
Insurance is one area of health care where consolidation could disrupt the most things for the Lehigh Valley.
Both LVHN and Jefferson have highlighted the benefits of integrating Jefferson Health Plans, Jefferson’s non-commercial insurance marketplace that offers Medicaid, Medicare Advantage, Affordable Care Act Marketplace and CHIP plans into LVHN’s existing healthcare operations. The CEOs of both networks said the program would improve care for unemployed people and reduce the cost of care.
There is no equivalent or comparable program to Jefferson Health Plans in the Lehigh Valley, although it is not the only one of its kind in Pennsylvania. It’s a well-established program that existed as a Health Partners plan for more than 30 years before Jefferson acquired sole ownership of it in November 2021. More than 340,000 people are covered under Jefferson Health plans, most of them in Medicaid.
Meyerhofer said the hospitals do not benefit from Medicaid or Medicare. With large baby boomer populations transitioning or already transitioning to Medicare in many countries, and many with serious health care needs and chronic conditions, hospitals are actually losing money for care.
But Meyerhofer said hospitals can make up for those losses by becoming more efficient in serving, and treating a larger volume of Medicaid and Medicare patients.
A large amount on a low reimbursement rate, it’s better for revenue if you can be more efficient in providing services to these patients, and it’s also better for patients, because they get better access, Meyerhofer said.
He said patients on Medicaid, as well as those who are uninsured and particularly uninsured, will benefit from continuity of care and better access to outpatient care services by getting plans from Jefferson Health Plans. Take advantage of the good deals. In particular, for those on Medicaid, it can be difficult to find outpatient providers who accept their insurance. But if the company that provides Medicaid insurance also has outpatient care providers, this problem does not exist.
They can leverage their size and administrative complexity to begin offering these plans to Medicaid patients and plans on the health insurance exchanges to provide comprehensive insurance to patients who are often uninsured and who need care. There is very limited potential, Meyerhofer said. .
It reduces uncompensated care, it improves continuity of care. And if they’re big enough, they can take advantage of the volume of patients they see to maintain revenue.
Those with private plans can pay more. Meyerhofer said mergers reduce competition and large networks can put more pressure on insurance companies for better compensation and rates, which ultimately leads to higher premiums for private insurance plans.
That’s backed up by some studies, including a Kaiser Family Foundation report that found that some mergers, particularly those that combine health systems in different markets, have led to price increases of 6 percent to 17 percent.
The Federal Trade Commission has challenged hospital mergers based on price increases, finding that they reduce competition and can lead to higher prices.
The union that represents nurses throughout the region, including at LVH-Pocono, also expressed concern.
“Studies show that consolidation can increase health care costs for patients by up to 12% without a corresponding increase in the level of patient care,” Matt Yarnell, SEIU Health Care PA director, said in an email. “Furthermore, highly concentrated health care markets can create low wages and staffing for frontline workers. … We want to make sure that patients and frontline workers remain at the center of these conversations. While the growing trend of mergers and acquisitions raises many questions and concerns, we look forward to working with Lehigh Valley and Jefferson University if this deal goes through.
In an interview Tuesday, LVHN CEO Dr. Brian Nestor said the merger will provide even better care, ultimately lowering the cost of care for patients.
If you take good care of it, you provide more. [if] He said that if you engage patients, they will have better outcomes and not need hospital services or unnecessary treatments, which will ultimately reduce the cost of care.
The LVHN spokesperson added that it was too early in the process to comment on the “sect” based on other states and territories.
A lot has to be decided before any merger can take place. The final agreement is still being negotiated, and will require government approval. The current leadership of the hospital will remain in place.
It is unclear how the merger will affect employees, particularly administrative, at the health networks, and what if any restructuring will occur.
However, the merger is sure to change the dimensions of the existing competition between St. Luke’s University Health Network and LVHN, although Meyerhofer said that in the short term he does not expect much to change because the two institutions are still in the region. is competing
After the announcement, Rick Anderson, St. Luke’s president and CEO, released a statement saying the network has “always respected LVHN” as a “solid local competitor,” according to “St. Luke’s.” Lux will focus on continuing to be a low-cost provider with high-quality care.
Meyerhofer said the integration of Jefferson Health Plans into LVHNs operation will power the new health network on Medicaid and Medicare dollars in the Lehigh Valley and surrounding areas.
But Meyerhofer said where he sees the biggest change in the short term is branding and public visibility. He said St. Luke’s has developed a major part of Temple St. Luke’s School of Medicine over the years as a way to differentiate it from LVHN, which has a medical school program with the University of South Florida. But Thomas Jefferson University is owned by Jefferson, and Sidney’s Kimmel Medical College is well-respected.
“I’m sure there will be some branding that enhances academic credibility and changes perceptions among consumers,” Meyerhofer said.
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