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Highmark's $1B Acquisition of West Penn Approved by PA

John Commins, for HealthLeaders Media, April 30, 2013

'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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3 comments on "Highmark's $1B Acquisition of West Penn Approved by PA"


Jack Jessop-Ellia (5/6/2013 at 8:48 AM)
I'm glad to see the WPAHS continuing to move forward. I'm interested to know how this will affect former employees.

J. Blake (5/2/2013 at 4:17 PM)
I would have preferred to see some of the $1B being used to lower premiums for the subscribers who paid that $1B to Highmark for their coverage. We just got our renewal notice for our small group with a 59.37% increase for FY 2013-2014 in our high-deductible plan. Over the past five years, we have seen huge yearly increases in our premiums, while we have decreased our benefits and increased deductibles and copays.

Arun K. Potdar (4/30/2013 at 10:21 AM)
This article just gives the news about acquisition. What benefits if any, a physician, employer or the patient (consumer) to expect? There will be only two major options to choose (Highmark & UPMC) from and in this era of small or no government political mindset, what regulatory oversight teeth Insurance Commissioner is going to show? Field days are ahead for the Insurer to consolidate and do what you please after elimination of completions. It is a bad decision for the patients and doctors all around. Income reduction for service providers and poor service at higher cost for consumers in spite of ACA implementations will be the result of this as history has shown. Forgot Ma Bell days? Airline Consolidation has done no favors to passengers; high cost and no services worth paying for is the result. Highmark will have to do lot for PR in terms of explanation of what its benefits are going to show up in the market Place. I wonder what Ralf Nader has to say about this?