Geisinger And The Milton S. Hershey Medical Center
Merge To Create The Penn State Geisinger Health System

7-1-97
Danville, Pa. -- The Penn State Geisinger Health System was formally launched today at a signing ceremony between officials from Geisinger and The Milton S. Hershey Medical Center. The merger of the clinical enterprises of Geisinger and Hershey Medical Center into a new, non-profit, physician-led health system was announced at a news conference at Geisinger in Danville.

Geisinger and Hershey signed a memorandum of agreement to merge on January 17, following approval of the merger by the Geisinger Board of Directors and Penn State Board of Trustees. Regulatory review was recently completed by the Office of the Attorney General of the Commonwealth of Pennsylvania, and the transaction was reviewed and approved by the Montour County Orphan's Court.

The merger takes full effect today. Over the next six months, the Penn State Geisinger Health System will make sure that participants in all other health plans have equal access to tertiary care -- sophisticated procedures such as organ transplants, bone marrow transplants and limb reattachment. This is in accordance with an agreement between the Attorney General, Penn State and Geisinger.

Frank Henry, chairman of the board of the new Penn State Geisinger Foundation, said, "I would like to acknowledge all of our employees who have shown their commitment to the new system by working diligently--and often overtime--over the past six months to effect a smooth transition. Many employees from both Geisinger and Hershey have participated on joint transition teams that have been meeting to plan the specific details of the new system. To everyone who has helped to get us here today, I simply say, 'Thank you.'" Henry said that the teams, who have been planning the future of areas like patient care, personnel, finances, and communications, will continue to meet in the months to come.

"This merger ensures that a strong Pennsylvania health-care system will not only survive but will thrive as organizations consolidate to become more efficient and effective," said Stuart Heydt, M.D., chief executive officer of the Penn State Geisinger Health System. "As this new system matures and grows, we will continue to look for opportunities for partnership with other health-care organizations."

Heydt said that the merger of the two non-profits establishes a billion-dollar enterprise that is the third largest physician practice in the nation. He added that the merger is the only one between a health system which includes an insurance organization, and a school of medicine. The Penn State Geisinger Health Plan, formerly the Geisinger Health Plan, is the largest rural HMO in the nation.

Providing physicians for rural areas with large populations of older residents is a major commitment of the new system. The Penn State Geisinger Health System will span 40 contiguous counties and will provide increased access to 1,000 physicians through its combined network of 77 clinics. The network will also efficiently serve large employers with multiple worksheets.

C. McCollister Evarts, M.D., president and chief academic officer of the new system, said, "This new community-focused, non-profit system will offer Pennsylvanians the highest-quality patient care, from primary to the most complex specialty care. These services will be supported by the latest medical research, conducted at Penn State's College of Medicine in Hershey and the Sigfried and Janet Weis Research Center in Danville."

According to Dr. Evarts, the system's merged research programs will focus on identifying and solving health problems specific to Pennsylvanians. He said that, while the ownership and operation of Penn State's College of Medicine will remain with Penn State, the College of Medicine's education and research enterprise will be closely tied to and supported by the new system.

Dr. Heydt and Dr. Evarts agree that integrating the two physician groups and their research and teaching capabilities will:
-- give people a broader range of medical services without leaving Pennsylvania;
-- offer people in the Geisinger area the additional choice of the resources of an academic medical center and people in the Hershey area the new Penn State Geisinger Health Plan, which provides both traditional and managed care coverage;
-- reduce costs while enhancing quality and service;
-- give patients the benefits of the latest research advances;
-- ensure that physicians continue to serve rural areas;
-- protect the public interest in supporting medical education and research, which are becoming more difficult to fund as health care costs are cut.

In response to community and employer needs for more efficiency in health care, the merger will help the two organizations achieve their combined, targeted cost reductions of $105 million over the next three years.

Both Geisinger and Hershey were originally established by philanthropic trusts from Milton S. Hershey and Abigail Geisinger. The trusts will remain intact, and contributions and research grants will continue to benefit the specific organization to which they were given.

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MEDIA INQUIRIES CONTACT:
Deborah Steele Saline: (o) 717-531-8608; (h) 717-761-5160; dss6@psu.edu
M. Steven Bortner: (o) 717-531-8607; (h) 717-838-5910; msb3@psu.edu
Robert Bomboy: (o) 717-271-6435; (h) 717-275-7822; rbomboy@geisinger.edu