Highmark's $1B Acquisition of West Penn Approved by PA
'This is a landmark transaction,' Consedine said in prepared remarks. 'We were cognizant that our review and the order we issued today may serve as a model for similar transactions across the state and country going forward.'
Healthcare economist Adam Powell, president of Boston-based consultants Payer+Provider Syndicate, said in an email exchange with HealthLeaders Media that western Pennsylvania now has two major integrated healthcare systems with products that bundle healthcare financing and delivery.
'Highmark has some nascent experience in operating an integrated delivery system, as it previously acquired Jefferson Regional Medical Center in March 2013 and announced the creation of a medical mall in Wexford, PA. Highmark's ownership of multiple sites of service will enable it to more effectively control the cost of care that its health plan members receive,' Powell says.
'The formation of integrated delivery systems is rapidly occurring across the United States. In Massachusetts, Tufts Medical Center is in the process of founding the insurer Minuteman Health Initiative, Partners HealthCare acquired Neighborhood Health Plan in 2012, and Boston Medical Center has offered coverage through its BMC HealthNet Plan since 1997. We also saw somewhat similar activity last year in Texas, with the merger of Baylor and Scott & White. I foresee that we will continue to see vertical integration between the financing and delivery of care.'
The $1 billion deal includes the $475 million in the initial purchase, along with the acquisition of $528 million in outstanding bonds, about $100 million less than initial estimates. Highmark officials said they anticipate refinancing the debt in the coming months.
John Commins is a senior editor with HealthLeaders Media.
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