Abington Health, Jefferson explore partnership

Abington Health is exploring a "unique" partnership with Center City's Jefferson Health System, Abington told employees in a letter Wednesday from chief executive Larry Merlis and chief of staff John J. Kelly.

The Montgomery County health system said the talks were part of a broader effort to find a partner.

"We are pleased to inform you that Abington Health is exploring options for aligning with another major health system through a strategic partnership that will ensure Abington will thrive in the future as we care for our patients in the rapidly evolving health-care environment," the letter said.

In recent years, health-care analysts and executives have been predicting a wave of consolidation among hospital systems as they come under pressure from declining admissions and lower reimbursements for care. But little has happened so far in the Philadelphia region.

Abington's letter identified Jefferson as one potential partner for a "unique model," and said that physician leaders and executives at Abington would evaluate the possibilities over the next 30 days.

Abington, which provided a statement containing the same information as the letter, described the arrangement with Jefferson as "an exclusive period of focused, intensive study" that would help Abington understand its options.

The Abington board "has not made any decisions on a partnership to date," the letter said.

Jefferson confirmed the talks in a statement.

"In conjunction with all of the Jefferson constituencies, we will be evaluating how we can best work together with Abington Health to deliver the finest health care available in our region," said Stephen Klasko, president and chief executive of Thomas Jefferson University and Jefferson Health System.

Abington, which includes Abington Memorial Hospital and Lansdale Hospital, is not new to merger talks.

In June 2012, Abington announced its intention to combine with Holy Redeemer Health System, but that deal fell apart over public opposition to Abington's agreement to stop performing abortions as a condition of the merger with the nearby Catholic health system.

For Jefferson, the talks come just months after the Philadelphia institution split amicably with longtime partner Main Line Health and a little over a year after Klasko took over as president.

In terms of revenue, Jefferson's clinical operations, now referred to as Jefferson Health System, are about twice as big as Abington's. Abington reported $784.2 million in revenue for the fiscal year ended June 30, 2013, compared with $1.5 billion for Jefferson - not including Thomas Jefferson University.

Jefferson was significantly more profitable, with an operating margin of 4.8 percent, compared with 2.6 percent at Abington.

$784.2M

Abington Health 2013 revenue

$1.5B

Jefferson Health System revenue

2.6%

Abington's operating margin

4.8%

Jefferson's operating margin

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