Hospitalogists, I'm back from the mother land (Austin) after convening with my teammates from the mothership (Workweek) feeling energized and nostalgic. Austin is a special place for me. Today is a short one! We're diving into the Pennsylvania health system merger mania together. Specifically, I'm breaking down details of the recently announced Jefferson Health - Lehigh Valley Health Network merger. My in-laws are from the area, so they might actually be interested in reading this one!! Thanks so much to NeuroFlow for sponsoring today's send. They have a great platform in mental health so check out their new maternal mental health launch below. |
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Exciting news for healthcare professionals: NeuroFlow has launched innovative digital care pathways specifically designed for maternal mental health. With 75% of women with perinatal conditions going untreated, NeuroFlow's integration into healthcare systems is improving the industry in a major way, addressing critical gaps in maternal healthcare. These pathways harness smart logic to deliver tailored assessments and resources for each stage of pregnancy, detecting declines in mental health and swiftly pinpointing when enhanced care is necessary. Now, you'll have a tool that covers essential topics like preparing for pregnancy, managing prenatal anxiety, and identifying signs of postpartum depression. See for yourself how NeuroFlow is revolutionizing support for expectant parents. |
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Going deeper on an interesting topic, theme, or trend |
What the heck is going on in Pennsylvania? |
We've seen a flurry of mergers and activity among health systems in the PA marketplace state-wide. Here's a quick rundown of recent moves over the past few years. In no particular order: Here's a quick rundown of the consolidated Jefferson-LVHN entity's financial and operating footprint based on fiscal year-end June 30, 2023 statements: |
What are the notable things to look for when studying a merger like this? Do I find analyzing random health system mergers on a Thursday in June fun? (yes) Topline numbers are important: - Combined revenues are $13.8B
- Combined Operating Margin is -0.5%
- Combined Net Margin is 2.0% (driven by investment returns not shown above - wild)
Footprint is important, too: - 30 hospitals
- 5,000+ beds in service
- 700+ sites of care
- 65,000 employees
- 228,000+ admissions
- 3.6M outpatient visits
But what's not in the numbers? E.g., what the heck is going on in PA competitively? There's a reason why all of these smaller health systems feel the need to consolidate. Usually moves like these happen from a posture of… "hey, we just need to survive" or, just as important and more likely here, is this move is a reaction to what everyone else in the market is doing. Simply put, everyone else in the market is getting bigger to stave off rising costs, create a sexy narrative of growth and 'synergies' for stakeholders, and survive in a tough market. The following seems to be true for Pennsylvania in this consolidating environment: Pennsylvania is a tough market demographically (2023 census growth data) for many health systems: |
For LVHN and many systems, expenses are outpacing revenues. It quickly boils down to a numbers game: If revenues minus expenses are positive, then your business is sustainable.
The past two years haven't been sustainable: |
Look at this growth in purchased services per patient day. On top of that absurd, alarming growth, almost every metric on a per-patient day basis is growing faster than patient revenues: |
Finally, growth prospects outside of merging are limited. You're surrounded on all sides. From an older Recon Strategy essay (Linked below): |
So Blake - what's the takeaway here? Health system transformation is coming for your market whether you like it or not. Transformation includes developing a dense network of healthcare delivery assets, merging to survive, and leveraging partnerships and new technology to compete with increasingly savvy outpatient participants. At some point, you either have the assets to bully people around, or you take the price you can get! |
Further Reading & Resources |
The latest from inside my community of healthcare thinkers |
Next week's deep dive is a comprehensive, cross-sectional analysis of large health system Q1 performance! Sample pic below. Plus, our upcoming Briefing will cover key 1st half 2024 trends by yours truly and 1-2 community members. Join the community - and the fun - below. |
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Here are some jobs that I'm curating for the healthcare industry. You can see the full list of jobs I've curated here. If you're looking to hire, use the promo code HOSPITALOGY to get your first job listing free on my curated job board. |
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Like I mentioned, our Workweek retreat was this week. My fellow creator and writer of Fintech Takes Alex Johnson swept the field during the rock, paper, scissors competition by ...exclusively choosing paper. 7 times in a row. 100% win rate. Incredible. There's a lesson in there somewhere! Have a great weekend everyone. Please share the newsletter with colleagues to support my livelihood! |
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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