Dive Brief:
- After six months of negotiations, Lancaster General Health and Penn Medicine have reached an agreement to consolidate.
- The agreement is still subject to state and federal approval; until then, the two health systems will continue to operate independently.
- While some experts believe consolidation may not be the right answer, Lancaster General Health president and CEO Tom Beeman said Tuesday, "You need to have scale to be cost-effective in the way you deliver care."
Dive Insight:
Many providers are pointing toward changes in payment models under the Affordable Care Act as a reason for the recent flood of mergers and acquisitions. However, at a recent workshop on healthcare competition, regulatory experts said that although the new payment models encourage greater collaboration and care coordination, that does not require consolidation. "It's obvious that a lot of the participants in those programs, and a lot of the most successful participants in those programs, have not consolidated," said James Landman, of the nonprofit Healthcare Financial Management Association in Illinois.
No cash will exchange hands in the Lancaster General/Penn Medicine merger, and the two organizations do not expect FTC opposition. Beeman said the price tag on the deal would be "incalculable."