IN A DEAL that would join two fast-evolving institutions, Thomas Jefferson University and Philadelphia University yesterday announced a preliminary agreement to merge.
The deal, expected to close by the end of June, could help boost Philadelphia University's profile in the highly competitive northeastern U.S. market for undergraduates, giving some of them a straighter shot at Jefferson's medical school.
Jefferson, which has already announced plans to merge with two hospital systems since 2014, would nearly double the number of its students and add significantly to its academic programs.
The leaders of both institutions emphasized in an interview that the deal would create an institution better able to offer programs focused on real-world problems, rather than traditional academic disciplines.
"Most schools say, let's have this little program and try to make it special. We're saying we have this university and it will all be special," said Philadelphia University president Stephen Spinelli Jr., who has led the school since 2007. He will join the Thomas Jefferson board and chair a new academic oversight board at Jefferson.
During a three-year transition period, the Philadelphia University's name will not change, but eventually it will be made clear that it is part of Jefferson, said chief executive Stephen K. Klasko, who will continue leading the entire organization.
He acknowledged that the merger is not the first thing anyone would expect from either institution. He said it's like a song that seems strange at first. "When you actually hear the song a few times, you realize it's a brilliant song," he said.
Under Spinelli, a co-founder of Jiffy Lube, Philadelphia University launched its College of Design, Engineering and Commerce, which was attractive to Klasko because it emphasizes collaborative work and hands-on learning.
The deal comes at a time when many small colleges and universities are under financial pressure as the number of 18-year-olds goes down and rising student debt loans are pressuring institutions to keep tuition increases in check. In the Philadelphia region, at least half a dozen small institutions had operating losses in their most recent fiscal years.
Mergers by tax-exempt schools are rare, averaging two or three per over the last decade, but the pace will double in the next few years, Moody's Investors Service predicted.
But Philadelphia University has been increasingly profitable under Spinelli, who has emphasized innovation and entrepreneurship at the school.
Spinelli and Klasko met about six months ago, when Klasko paid a quick visit to the East Falls campus, not sure what to expect.
After talking, they walked outside and ran into a Jefferson professor and emergency medicine physician, Bon Ku, who was on campus meeting with an industrial designer about some projects he wanted to do in the medical field.
"I thought he set me up," Spinelli said. "But then I learned that he doesn't do that kind of thing."
That chance meeting set the two racing off toward the deal that was approved by the Philadelphia University board Monday and by the Jefferson board yesterday.
"This is a big opportunity. I could not have crafted a more interesting next step, personally, for me professionally," Spinelli said.
The merger with Philadelphia University is the third for Jefferson since Klasko became chief executive of the Center City institution in September 2013.
Soon after splitting Jefferson from Main Line Health, its longtime partner in the former Jefferson Health System, the new Jefferson under Klasko announced a merger with Abington Health in Montgomery County. The deal was final in May.
In October, Jefferson announced that it had a preliminary deal to add Aria Health, which has three hospitals, in Frankford, Torresdale and Langhorne. A definitive agreement has not been reached with Aria.
Philadelphia University has 2,249 full-time undergraduates, down from 2,635 in 2011-12.
It had a small endowment of $28 million, according to its latest audited financial statement.
Jefferson had 1,072 enrolled at the Sidney Kimmel Medical College and 281 at its School of Pharmacy in the 2014-15 academic year, the latest figures available.
Jefferson's schools of nursing, health professions, population health and its Graduate School of Biomedical Sciences had 1,618 full-time equivalent students.
Jefferson has an endowment of $708 million, its audited financial statement shows.