In June 2011, Highmark, the region’s dominant health insurer, and West Penn Allegheny Health System (WPAHS), the second largest hospital network in the area, announced an agreement for what they called a “capital partnership.”
Highmark would begin to invest $475 million in terms of grants, loans and donations over four years to stabilize the financially ailing WPAHS. This infusion of funding would also grant the hospital system the ability to continue to deliver quality medical services until the two entities could navigate regulatory approval requirements by the Pennsylvania Insurance Department. More importantly, this newly formed alliance was created in order to preserve healthcare choice in our region.
By November 2011, Highmark announced it had reached an affiliation agreement with WPAHS. Less than a year later, the Pennsylvania Insurance Department stated they had great concern over the short and long-term financial conditions of WPAHS. At this point, Highmark approached WPAHS about the option of restructuring their debt going forward.
Due to WPAHS feeling that Highmark had breached the affiliation agreement by fundamentally changing the terms when insisting the health system file for bankruptcy first, WPAHS began to test the market for other suitors—essentially ending negotiations between the two businesses.
Last Friday, the Allegheny County Common Pleas Court blocked WPAHS from talking to other possible affiliation partners. In its ruling, the Court said, “WPAHS made the unilateral decision that Highmark’s anticipatory breach was incurable,” when in fact the breach was curable. In fact, WPAHS compiling a list of possible financial suitors before the break-up announcement had in fact committed a contractual violation of its own.
As a state Senator, I am not in a position to tell private businesses how to run and who to be affiliated with. However, there are far too many consumers and employees who are impacted by this falling out to remain silent.
Now that a Common Pleas judge has ruled on this disagreement, the two businesses need to move forward with this partnership. After all, this has been precious time lost on a relationship that seemed to be promising for our region and the integrity and delivery of healthcare in our region must be protected. We have thousands of individuals who are directly affected by not only WPAHS but all of the region’s healthcare industries including insurance companies.
These include employees, employers, consumers, patients and the dozens of related industries associated with healthcare like the medical equipment suppliers.
Healthcare is a major economic driver in our region. It has attracted individuals and families to our area and in turn they have invested back into our communities. Competition is a good thing. The Highmark-WPAHS partnership offered promise to our region’s future and they must act now before it’s too late and deals are broken. Most importantly, the lives of patients are on the line. The time to move forward with this affiliation is now.
Senator Wayne D. Fontana
42nd Senatorial District