Dive Brief:
Nonprofits ChristianaCare and Virtua Health on Wednesday signed a non-binding letter of intent to explore a merger between the northeastern health systems.
The combined nonprofit regional system would span more than 600 sites of care and employ nearly 30,000 employees across 10 contiguous counties in New Jersey, Delaware, Pennsylvania and Maryland, according to a press release.
If combined, annual revenues between the two systems could tally over $6 billion.
Dive Insight:
Virtua and ChristianaCare will enter the due diligence process with the intent to sign definitive agreements and seek regulatory approvals for the merger. Day-to-day operations will remain unchanged during negotiations and both organizations will remain separate entities while they explore a combination, the nonprofits said.
“We’ve reached an important stage. Both organizations are signaling the desire to continue a thorough and strategic exploration of what would be possible if we joined two legacies of health care excellence,” said Edward Cloues, chair of Virtua Health’s board of trustees, in a statement. “Our trustees are encouraged by our initial assessments and conversations which suggest we could collectively enhance our capabilities and strengthen our outreach to the communities who depend on us.”
If merged, the health systems say they would create better access to urgent, primary and behavioral healthcare, including a “proposed maternal risk program” to support more than 15,000 births per year, according to a press release.
New Jersey-based Virtua Health’s portfolio consists of five hospitals, two freestanding emergency departments and 42 ambulatory surgery centers. Delaware-based ChristianaCare has three hospitals and various outpatient services in northern Delaware and surrounding areas.
Both nonprofit systems have teaching relationships. Virtua is affiliated with Rowan University and partners with Penn Medicine and Children’s Hospital of Philadelphia for different specialties. ChristianaCare is a teaching system with more than 260 residents and fellows.
The combined entity could have over $6 billion in annual revenues. Virtua Health recorded $3.2 billion in revenue for the year ended Dec. 31, 2024, while ChristianaCare reported operating revenues of $3.1 billion for the year ended June 30, 2024.
Credit agencies have rated both systems as “stable.” S&P Global in December said it expected Virtua to continue generating “solid operating margins and cash flow.” In July, Moody’s Ratings said ChristianaCare had ample liquidity and a strong state-wide brand with robust demand for its clinical services.
The merger comes as providers face significant policy shifts. The newly-enacted Big Beautiful Bill Act includes over $1 trillion in cuts to the safety-net program Medicaid. Providers are expected to log significant losses. By 2034, more than 100 rural hospitals are estimated to be at high risk of closure.
In 2024, 21% of Virtua’s patient service revenue came from fee-for-service Medicare and Medicaid. More than 15% of ChristianaCare’s net patient service revenues in its 2024 financial year came from Medicaid.
“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,” George Foutrakis, chair of ChristianaCare’s board of directors, said in a release.
