Jefferson Health Eyes Doubling Insurance Business through LVHS Merger

The primary objective of this merger is to propel Jefferson Health's expansion into a new market swiftly. By aligning the payer business with LVHS' care delivery services, the 17-hospital academic system aims to enhance resilience and reinforce its commitment to insurance.

In a surprising turn of events, Jefferson Health's collaboration with Lehigh Valley Health System (LVHS) took an unexpected course, evolving from a plan to white label Jefferson's government-focused health plan to a full asset merger.

This revelation came recently when Jefferson Health MD & CEO Joe Cacchione shared insights into the strategic move.

Commenting on the same, Cacchione recalled, "They had been in the market previously; we think we can get our projected five-year growth in the health plan [completed] within 18 to 24 months by doing the deal with LVHS.”

Jefferson’s Targeted Move into the Insurance Segment

The primary objective of this merger is to propel Jefferson Health's expansion into a new market swiftly. By aligning the payer business with LVHS' care delivery services, the 17-hospital academic system aims to enhance resilience and reinforce its commitment to insurance.

Cacchione stressed the significance of diversifying revenue to protect Jefferson and its care delivery business from unforeseen disruptions, citing the impact of events like COVID-19 on fee-for-service models.

"It's really diversifying revenue for us not to ever have to be exposed, as we all were in COVID when fee-for-service went through the floor," he stated.

As of 2023, Jefferson Health Plans contribute merely 6% to the organisation's revenue mix, with Thomas Jefferson University claiming 22% and care delivery representing a significant 72%. The strategy now is to double both the health plan's revenue and covered lives within the next five years.

Commenting on the same, Mark Whalen, Jefferson Health EVP and enterprise chief strategy and administrative officer, said, "Lehigh presents an opportunity to short-circuit that and go a lot faster."

Insurance Business Proposing a New Lever for Growth

The insurance business is poised to be a crucial growth lever for Jefferson Health in the coming years. Integrating care delivery and financing allows the organisation to invest strategically and eliminate redundancies and waste.

Further, Jefferson Health's chief financial officer, John Mordach, highlighted the importance of disproportionately growing the plan to attract potential provider partners.

Moving forward, Jefferson Health plans to focus on the growth of Jefferson Health Plans in alignment with its governmental program expertise. The immediate focus is expanding into Medicare Advantage and the exchange before delving deeper into the commercial sector.

Executives assured that the integration with LVHN will be approached with the experience gained from previous mergers. While streamlining assets and rationalising the current footprint, the organisation aims to connect offerings with LVHN's more traditional service lines.

Additionally, Jefferson Health expresses interest in expanding its presence beyond the hospital setting, aiming for purposeful growth in underpenetrated areas in Southeast Pennsylvania and South Jersey.

This merger, while unexpected, aligns with Jefferson Health's strategic vision to fortify its position in the healthcare landscape, demonstrating a clear commitment to enhancing both care delivery and insurance services.

A key aspect of Jefferson Health's recent initiatives includes the introduction of a program, Pride at the Jefferson Center for Healthy Aging, aimed at providing primary care to the city's aging LGBTQ+ population.

This program, initiated two months ago, focuses on delivering gender-affirming care, HIV treatment, and advanced care planning to address the healthcare needs of the traditionally underserved LGBTQ+ community, specifically older adults.