Highmark Purchase of West Penn Allegheny Gets Green Light From State

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The Pennsylvania Department of Insurance has finally approved insurer Highmark’s bid to purchase the struggling West Penn Allegheny Health System.

The deal had been in the works for two years and had sparked a bitter row with rival health system UPMC (formerly the University of Pittsburgh Medical Center). At one point, patients insured through Highmark Blue Cross Blue Shield faced the threat of losing access to UPMC medical services, as UPMC said it could not be expected to do business with a direct competitor.

From the state’s perspective, the deal was both desirable and concerning. While it would put West Penn Allegheny Health System back on more firm financial ground and guarantee competition and choice in medical providers for Pennsylvania residents, it also could threaten community hospitals and paradoxically reduce competition -- especially if UPMC and Highmark each erect barriers to patients moving between the two networks.

The deal will put Highmark in the league of Kaiser Permanente as one of the nation’s largest “integrated delivery networks” that makes payor and provider one and the same.

The review was the “most complex and extensive review” the Pennsylvania Department of Insurance had ever done. According to the press release, the comprehensive record includes more than 64,000 pages of reports and analytical data, more than 10,000 pages of public comments and more than six hours of public testimony.  

As more insurance providers seek greater control of costs through taking over struggling provider networks, the department’s work may be a model for other states reviewing such proposed deals, stated Pennsylvania Insurance Commissioner, Michael Consedine in the press release.

"This is a landmark transaction,” he stated. “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.”

The order takes can be viewed, along with the complete public record, at www.insurance.pa.gov by clicking on the Highmark, West Penn icon.