Tower Health and Jefferson Health have formed a clinical affiliation
Tower leadership, governance, and day-to-day operations will remain unchanged as the affiliation takes shape, Tower said.
Tower Health and Jefferson Health announced Friday that they have formed a clinical affiliation that would expand access to advanced treatments in Tower’s markets northwest of Philadelphia.
The two nonprofit organizations said Jefferson is not acquiring Tower, which is the biggest healthcare provider in Berks County and also owns two hospitals in Chester and Montgomery Counties.
“Healthcare organizations today face unprecedented challenges, including inadequate reimbursement, rising costs, workforce shortages, and increasing competition,” Tower’s CEO Michael Stern said in an announcement to employees.
“History teaches us that when an organization is confronted by challenges on multiple fronts, success depends on finding the right ally — one that shares our values, respects our strengths, and is committed to the same mission,” Stern’s note said.
Jefferson said it routinely works with other health systems to provide high-level specialty care throughout the region it serves.
“As part of that commitment, we are working with Tower Health to enhance access to advanced tertiary and quaternary services, bringing more specialized expertise, innovative treatment options, and coordinated care closer to the communities we serve,” Jefferson said.
Details of the arrangement with Tower will worked out in the next few months.
Jefferson is also among the Philadelphia-area health systems exploring a clinical alliance to support financially struggling St. Christopher’s Hospital for Children, which Tower manages and owns in a 50-50 joint venture with Drexel University.
Turnabout for Tower
For Tower Health, the potential collaboration with Jefferson represents a turnabout from a decade ago when the system based in West Reading plotted a move into the Philadelphia market. Tower spent $423 million for the acquisition of five community hospitals in Southeastern Pennsylvania from Community Health Systems Inc. in 2017.
The idea then was that the health system’s anchor, Reading Hospital, would draw patients for the most advanced care to Berks County from the Philadelphia region. That deal led to massive losses as the anticipated patients didn’t materialize in Reading and then COVID-19 crushed health system finances nationwide.
Tower sold or closed three of the five acquired hospitals, but remains saddled with a huge debt load. The interest payments leave the system with little money left over to invest in the new facilities and services. Last year, Tower instituted significant service cuts and layoffs at Pottstown Hospital.
Jefferson has expanded through acquisitions from three hospitals to 33 since 2015. The most recent acquisition was Lehigh Valley Health Network two years ago, creating a network that stretches from South Jersey to near Scranton. The system has been losing money for years as management attempts to make the hospitals it acquired work as a financially sustainable system.
This week, Jefferson sued Independence Blue Cross, claiming a series of five payment policy changes cost it nearly $100 million this year.
