ChristianaCare, Virtua Health explore forming new health system

Two hospital systems in the Delaware Valley are exploring the idea of joining forces to create a new, non-profit health system.

Janice E. Nevin, MD, president and CEO of ChristianaCare, and president and CEO of Virtua Health, say they are exploring partnering to create a new health system.

ChristianaCare and Virtua Health announced Wednesday that they have signed a non-binding letter of intent to jointly operate a new health organization. The systems said they are looking at “co-founding” a new entity that would serve patients in Delaware, New Jersey, Pennsylvania, and Maryland.

A Virtua Health spokesperson said Wednesday that if they move forward, it would not be a merger of the two organizations, but they would be creating a new organization.

Virtua brought in $3.2 billion in revenue, while ChristianaCare pulled in just over $3 billion, according to the Delaware Business Times. Combined, the two systems offer more than 2,900 hospital beds. Both systems serve communities in the suburbs of Philadelphia and the tri-state area of Pennsylvania, New Jersey, and Delaware.

ChristianaCare, based in Wilmington, Delaware, operates three hospitals with a total of 1,430 beds, along with a host of clinics and outpatient facilities. Virtua Health, based in southern New Jersey, runs five hospitals with 1,492 beds, along with hundreds of other healthcare locations.

Janice E. Nevin, MD, president and chief executive officer of ChristianaCare, cited the need to act in a changing market.

“At a time of great uncertainty in health care, ChristianaCare and Virtua Health have the foresight and courage to explore what is possible,” Nevin said in a news release. “We are excited to take this bold step to double down on our mission, multiply our excellence and ensure our legacy of high-quality care in our local communities for generations to come.”

Dennis W. Pullin, president and chief executive officer of Virtua Health, said they are taking a first step “to amplify the strengths of two trusted health systems.”

“Together, we aim to create an integrated regional health system built on human connection, clinical excellence and a deep commitment to all people in the communities we serve,” Pullin said in a statement.

The organizations said they will do their due diligence with hopes of signing definitive agreements and securing the approval of regulators, but a Virtua spokesperson said there is no timetable on the process. The spokesperson noted that VIrtua and ChristianaCare are in an exploratory phase and they must assess the alignment and “cultural and strategic fit” of the organizations before moving forward.

The potential partnership comes at a time when hospitals and health systems are looking at reduced funding from the federal government. President Trump’s tax package would reduce Medicaid spending by $1 trillion over the next 10 years, leaving millions without coverage and adding more financial pressures to hospitals, industry trade groups say. George N. Foutrakis, chairman of the ChristianaCare Health System Board, noted the challenges facing hospitals in a statement accompanying the announcement.

“Our vision for this new health system — when Medicare and Medicaid are facing cuts and many hospitals are struggling to stay open — gives me hope and excitement for our future and for the health of our neighbors,” Foutrakis said in the statement.

ChristianaCare and Virtua said their goals would include expanding access to primary care, urgent care and maternal health services. They also said they would strive to improve maternal health.

If ChristianaCare and Virtua create a new entity without merging, they would not be the first to engage in such a collaboration. Henry Ford Health and Ascension Michigan came together last year as a combined organization, forming a $10.5 billion system in the joint venture. Officials stressed it is not a merger or acquisition.