Dive Brief:
- UPMC and Jameson Health System have finally merged after a year of negotiations. The new entity will be named UPMC Jameson.
- The merger hit a major setback last year when the Pennsylvania attorney general raised antitrust concerns with UPMC's acquisition.
- UPMC plans to invest $75 million in facilities and services, as well as an additional $10 million in physician recruitment. The merger also secures all employee pensions and services all of Jameson's debt.
Dive Insight:
Additional terms of the agreement state UPMC can't acquire any more hospitals in Pennsylvania without providing, at least, three months written notice to the attorney general's office.
UPMC has more than 20 hospitals, mostly in Western Pennsylvania. Jameson, a rural hospital with 1,200 employees, has been looking to partner with a larger health system for more than five years as patient revenue has dropped. The state attorney general's office was hesitant to approve the merger since UPMC had previously acquired Horizon Health System, leading the office to be concerned the Jameson merger would give UPMC too much healthcare and price control in the area.
Hospital mergers continue to make headlines, with one of the biggest deals between Advocate Health Care and NorthShore University HealthSystem under scrutiny by the U.S. District Court. The Federal Trade Commission (FTC) claims that merger would reduce competition and jack up healthcare costs in the area, according to FierceHealthFinance. If the merger is approved it would become the largest healthcare system in Illinois with 16 hospitals.
The agency may be justified with its concerns, especially in light of a recent study that showed cross-market hospital mergers in the U.S. almost always result in higher prices, as reported by Healthcare Dive. The study analyzed 500 mergers between 2000 and 2012 and showed cross-market mergers increased costs up to 10% for various inpatient procedures.