Lehigh Valley Health Network to expand geographic reach with Pocono Health System deal

Friday, May 29, 2015

Lehigh Valley Health Network, the growing system in Allentown, Pa., would expand its geographic reach under a tentative deal with the Pocono Health System., based in Tobyhanna, Pa.

The deal would add that system's Pocono Medical Center in East Stroudsburg, Pa., roughly an hour's drive northeast of Lehigh Valley's flagship hospital, to its four-hospital network. Pocono Medical Center is also located about an hour east of a Hazleton, Pa. hospital that Lehigh Valley acquired in January 2014.

The move is the latest in eastern Pennsylvania's consolidating market, where Danville-based Geisinger Health System has struck a string of deals that extend into New Jersey. Meanwhile, St. Luke's University Health Network, Bethlehem, Pa., has announced plans to build a rival hospital to Pocono Medical Center.

In western Pennsylvania, consolidation has led to intense competition in Pittsburgh's market between UPMC and Highmark, which includes the Allegheny Health Network.

Geoffrey Roche, Pocono Health System's director of community outreach and government relations, said the competitive market was not a factor in the decision to merge, which the Pocono board first began to deliberate two years ago in response to falling reimbursement. The system selected Lehigh Valley after hiring consulting firm Kaufman Hall to review its options, he said.

Pocono Medical Center reported income of $13.1 million last year on revenue of $247.3 million.

Pocono Health System would acquire access to capital and information technology under the deal, said Matthew Burns, spokesman for Lehigh Valley Health Network. Lehigh Valley reported income of $41.9 million on revenue of $1.7 billion last year.

The deal is expected to close in the first half of next year after Lehigh Valley and Pocono officials finalize terms and receive regulatory approval for the deal.