Jefferson Health, a 32-hospital, $15 billion health system stretching from Eastern Pennsylvania into South Jersey, took on a $196 million operating loss in fiscal year 2025, The Philadelphia Business Journal reported.

Jefferson CEO Dr. Joseph Cacchione told The Journal that the health care system has a “three-year journey” to address its deficit. The rebounding strategy includes “securing more state support for its Medicaid managed care plan, negotiating improved payment rates from commercial and government health insurers, growing revenue and delivering care more cost-efficiently — a move that will likely involve layoffs.”

The CEO noted that Jefferson’s nearly 900 resident physicians and fellows voted in January to unionize. The health system is currently in negotiations for a labor deal, which could mean higher personnel costs.

“We’re going to have to make some hard decisions,” Dr. Cacchione said. “We’re here to serve the community first and foremost, but we can’t sustain losses like this on an annual basis.”

According to The Journal, most of Jefferson’s 2025 deficit came from “a $170 million loss incurred by insurance arm Jefferson Health Plans, which covers about 370,000 Medicaid and Medicare members in Pennsylvania and New Jersey.” Dr. Cacchione said Jefferson is also expecting higher payments to managed care plans participating in Pennsylvania’s HealthChoices program.

The article mentions the 2023 closure the Einstein Medical Center in Elkins Park as an example of “reducing certain service line duplications at its hospitals near one another.”

In March, Jefferson officials were considering moving their headquarters out of Philadelphia and into the suburbs. Dr. Cacchione told The Journal last week that Jefferson “will always be in Center City and a Philadelphia-based health system but acknowledged some units could be relocated.”

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