Einstein Healthcare Network and Jefferson University Hospitals Merger

CORPORATE STRUCTURE

The Einstein Healthcare Network (EHN) is comprised of: Einstein Medical Center Philadelphia, PA; Einstein Medical Center Elkins Park, PA; Einstein Medical Center, Montgomery, PA; MossRehab, Elkins Park, PA; Willowcrest (skilled nursing and rehab), Philadelphia, PA; and multiple primary care, outpatient, pediatric, and specialty care centers.

Jefferson University Hospitals (JUH) are comprised of 14 hospitals, 11 in Pennsylvania and 3 hospitals in New Jersey, Jefferson Cherry Hill, Jefferson Stratford, and Jefferson Washington Township (formerly Kennedy Health, see Thomas Jefferson University- Kennedy Health System merger on this website). JUH also has 22 outpatient centers – 19 in PA and 3 in NJ, and 5 urgent care centers in PA.

Because Jefferson is headquartered in PA and will be assuming operation of Einstein, also in PA, the merger will not be subject to the CHAPA process through the New Jersey Attorney General’s office. Instead, it will be under the aegis of the Pennsylvania Attorney General’s office, adhering to the Review Protocols for Fundamental Change Transactions for non-profit transactions in healthcare.

REVIEW PROTOCOLS FOR FUNDAMENTAL CHANGE TRANSACTION PROCESS

When two non-profit health systems announce an intention to merge, they must contact the Pennsylvania Attorney General’s office and begin the Review Protocols for Fundamental Change Transaction process. This begins with submission of a Letter of Intent, followed with the AG’s office requesting information and documentation including financial statements, fair value appraisals, board meeting minutes, conflict of interest statements from board members and key employees, any consultant reports, and hierarchy charts. The merging parties must post public notice of the proposed transaction so the community is made aware of the merger. Unlike the CHAPA process in New Jersey, there is no required public hearing. The AG’s office makes a decision based upon whether the merger is in the interest of the public and if so, the AG may request the parties to seek approval before the Orphans’ Court in the county of the headquarters of the acquiring healthcare system. A court appearance generally happens if a non-profit hospital is becoming a for-profit hospital. The PA AG’s office provides oversight of the transaction after it is completed and may require the new entity to report to the AG on a regular basis.

FTC COMPLAINT

In February 2020, the FTC filed a complaint against Thomas Jefferson University and Albert Einstein Healthcare Network alleging the proposed merger violated the Federal Trade Commission Act and the Clayton Act. The FTC asserted that the merger would mean that Jefferson would control 60 percent of the in-patient market in the Philadelphia area with fourteen hospitals and at least 45 percent of the market in the broader geographic area.

A motion filed with the Pennsylvania U.S. District Court to preliminarily enjoin the merger was denied by the judge in a 62-page decision in December 2020. On March 1, 2021, it was announced that the FTC was dropping the appeal of that decision and its opposition to the merger, which allows the merger to move forward.

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