Jefferson Health and Lehigh Valley Health Network formally announced their intent Tuesday morning to explore a merger that could reshape the health care landscape in eastern Pennsylvania and South Jersey.

The proposed union, outlined in a non-binding letter of intent, would give rise to a regional health system featuring 30 hospitals, a national research university, and a health insurance company spanning two states.

The combined entity said it aims to leverage its extensive resources, encompassing more than 700 care sites and boasting a workforce exceeding 62,000 employees.

Dr. Joseph G. Cacchione, CEO of Jefferson Health, said the move “reflects a response to the evolving health care landscape and the changing needs of diverse communities.”

“The health care landscape and our communities’ needs are changing; it is critical leading systems evolve and make investments in the future of care and wellness-growing and protecting access to enhanced, affordable, high-quality and innovative care, particularly for historically under-served patients,” Cacchione said. “Combining Jefferson’s and LVHN’s resources will allow us to meet the changing needs of our diverse communities faster, more efficiently and more effectively. Together - with our combined network of resources and sites of care, managed care expertise, education and research capabilities - we will have the ability to make significant improvements to health outcomes and address health disparities in this region, and beyond, to the benefit our communities, patients, physicians, faculty, staff, students and health plan members.”

Under the proposed merger, Cacchione is slated to serve as the CEO of the combined entity. Dr. Brian A. Nester, current CEO of Lehigh Valley Health Network, would transition to the role of executive vice president and chief operating officer, in addition to serving as president of the legacy LVHN.

Jefferson Health reported revenue of $9.7 billion in fiscal 2023, while also experiencing an operating loss of $78.5 million. On the other side, Lehigh Valley Health Network, operating 13 hospital campuses and employing 20,000 individuals, generated revenue of $4.1 billion and achieved an operating income of $10.4 million in the same fiscal year.

The merger, officials from both sides said, is anticipated to bring about sustainable cash flow and improved financial stability, empowering the combined organization to continue investing in innovative treatment capabilities and research and development.

“We are thrilled to be combining with Jefferson and excited about the immediate and long-term benefits this combination will create for the communities of the Lehigh Valley and eastern Pennsylvania,” Nester said in a statement. “In Jefferson, we have found an ideal partner that shares our culture and commitment to excellence in clinical care and a learning environment, and that has done a fabulous job in establishing a highly successful health plan with a sharp focus on the well-being of Medicaid and Medicare beneficiaries. The expertise derived from these operations is becoming a crucial competency for health systems to deliver on their mission, and Jefferson Health Plans will help drive improvements in health outcomes, especially in vulnerable populations. We are also very excited about the opportunity to expand academic and talent development programs that will further bolster our provider pipeline and enhance our ability to attract and retain top talent to the benefit of the communities we both serve.”

According to a news release, the potential merger promises a host of benefits, positioning the combined entity to address the diverse health care needs of their communities more efficiently.

“The integrated care delivery system is expected to comprise a national research university and an expanded not-for-profit health plan,” the release states. “With a focus on population health management and quality-focused care services, the combined capabilities of Jefferson and LVHN are poised to positively impact health outcomes in the region.”

While the parties involved are enthusiastic about the potential benefits of the merger, regulatory approval is a crucial step that looms on the horizon. The definitive agreement is expected to be signed in 2024, subject to completion of all necessary regulatory reviews and closing conditions.

Both Jefferson and LVHN said they would continue operations as separate, independent entities until the merger is finalized, ensuring that patients and communities maintain uninterrupted access to care throughout the process.