Dive Brief:
- Pittsburgh's UPMC and Jameson Health System can move forward with a merger, after it was approved by a federal magistrate under an arbitration process.
- Under the terms of the agreement, UPMC will make $80 million in improvements to Jameson Health and will absorb $18 million in Jameson's pension obligations.
- Some restrictions put in place by a federal court in light of antitrust concerns include requiring UPMC to keep Jameson as an acute care hospital for 10 years and prevents UPMC from terminating current health plan contracts.
Dive Insight:
Additional terms of the agreement state that hospital privileges for any UPMC Jameson physician can't be revoked because a physician is employed by a health system other than UPMC. Also, 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 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.
As reported recently by Healthcare Dive, a recent study of 500 mergers found that in-state hospital mergers that operate in different markets, on average, do increase costs by 6% to 10%. Some industry experts said the results may push regulators to question all mergers.