More on Mergers & Acquisitions

Lancaster General joins University of Pennsylvania Health System

"It has become necessary to build scale to meet community health needs well into the future."

Susan Morse, Managing Editor

Photo of Lancaster General Health from Facebook

Lancaster General Health, which generated nearly $1 billion in 2014 revenue, will join the University of Pennsylvania Health System, the healthcare providers announced last week, in a move that expands the University’s reach in the state.

Financial terms of the deal were not announced. It expands an already collaborative working relationship between the academic medical center and Lancaster’s three hospitals.

In the deal, Penn Medicine would provide for the healthcare needs of the LG Health community, while LG Health would continue to retain its assets, according to Lancaster General Health.

[Also: Tracking 2015 mergers and acquisitions]

Lancaster President and CEO Thomas Beeman said industry trends forced the merger.

For example, Lancaster General Health has incurred about $250 million in new costs during the past several years under provisions in the Affordable Care Act, according to Beeman.

"Health care is undergoing unprecedented seismic transformation," Beeman said. "We are not in the hospital business anymore. We are in the business of trying to keep people healthy.… It has become necessary to build scale to meet community health needs well into the future."

Follow Healthcare Finance on Twitter and LinkedIn.

Lancaster evaluated a number of potential partners before deciding to unite with Penn, according to Beeman.

The merger gives Lancaster General a way to coordinate care for patients who need specialized services available at Penn Health System, among the largest health systems in the Philadelphia region.

The formal agreement finalizes discussions the systems started in October and requires state and federal regulatory agency review.

The Pennsylvania College of Health Sciences will remain a part of the Lancaster General Health system.

Twitter: @SusanMorseHFN