Highmark to Acquire WPAHS

A Pittsburgh-based health plan says it will acquire a struggling Pittsburgh-based health system in a move that could have a significant impact on the western Pennsylvania healthcare market.

Highmark Inc. announced Tuesday morning that it is in the process of acquiring the financially troubled West Penn Allegheny Health System. The move was unanimously approved by the boards of both companies.

While a definitive agreement is still being developed, Highmark is expected to commit $475 million over four years to WPAHS. That includes an immediate $50 million grant to be used for infrastructure improvements to West Penn Hospital in Bloomfield and Forbes Regional Hospital in Monroeville. In addition, Highmark is expected to contribute $75 million to fund scholarships of students attending medical schools affiliated with WPAHS, and to support other education programs for health professionals.

The acquisition could challenge the dominance of the University of Pittsburgh Medical Center in the Pittsburgh-area market. UPMC has been in a protracted contracting dispute with Highmark. Unless it is renewed, the current contract between Highmark and UPMC will end on June 30, 2012, but members will still be able to access UPMC hospital services through mid-year 2013.

In making the announcement, Kenneth R. Melani, M.D., Highmark's president and CEO, said the acquisition is the first step in a provider strategy that includes a network of independent community hospitals, an alignment of physicians and outpatient services.