AtlantiCare and Geisinger health systems make merger plans official

If regulatory approval is given, AtlantiCare, southern New Jersey’s largest healthcare organization, will become a part of the Geisinger Health System sometime next year. The two organizations have signed a definitive agreement for AtlantiCare to become a member of the Geisinger Health System, and expect the regulatory approval phase to take 9 to 12 months to complete.

Under the agreement, AtlantiCare, which is based in Atlantic City, New Jersey, will retain its name and brand, but will merge operations with the larger Geisinger Health System, based in Danville, Pennsylvania. Terms of the deal were not released, but the organizations did say that representatives from each will sit on the AtlantiCare and Geisinger Health System Foundation boards of directors.

In a press release, AtlantiCare and Geisinger leaders explained that the goal for the merger is to capitalize on opportunities as health care moves toward a more value-based model.

Geisinger has a record of investing in its electronic health record system and other healthcare IT to facilitate research and population health initiatives. According to Geisinger’s 2013 annual report, it invested $182.6 million in capital improvements last year and is one of only a select number of healthcare systems that has its own “High-Performance Medical Computing Core” facility that houses a computational cluster that allows researchers to complete computations in several minutes or hours that would take a single computer weeks to compute. As part of Geisinger, AtlantiCare would presumably soon be able to benefit from some of these investments.

“Geisinger is well experienced in the technology enhancements and care redesign necessary to successfully achieve the outcomes most meaningful to our patients and communities,” stated AtlantiCare President and Chief Executive Officer David P. Tilton in the press release. “Together we will provide a system of care different from what is currently available in southern New Jersey.”

In addition, unlike AtlantiCare, Geisinger has a health insurance arm with 467,000 health plan members and has created several innovative care models to control costs through standardization and better use of evidence-based medicine, as well as interventions that lower the overall cost of care by keeping patients healthier. As healthcare systems are asked to take on more of the financial risk for costly care that could have been prevented, healthcare systems including Ascension Health, Catholic Healthcare Initiatives, North Shore-Long Island Jewish Health System and many more have announced plans to launch their own health plans soon. Aligning with Geisinger gives AtlantiCare a leg up in this regard.

Finally, size still matters in healthcare mergers as larger organizations can cut costs of support services and purchasing. According to the press release, Geisinger serves more than 2.6 million residents throughout 44 counties in central and northeast Pennsylvania, and has 21,000 employees, four times as many as AtlantiCare.