- UPMC is eyeing expansion in central Pennsylvania via an affiliation with Harrisburg-based PinnacleHealth System, the Pittsburgh Post-Gazette reports.
- Under the proposed deal, UPMC would establish an affiliation with Pinnacle and at some point the road acquire the three-hospital system with 636 beds and 6,200 employees.
- The acquisition could serve as a boost for UPMC's health insurance product line, which accounted for nearly half of its operating revenue last year.
The deal, which is still being worked out, would be UPMC’s largest to date and the first to involve an entire health system. Previous acquisitions have involved one hospital at a time — the most recent being Susquehanna Health in Williamsport, east of Pittsburgh.
In addition to expanding the UPMC brand beyond its traditional western Pennsylvania base, the deal could help grow UPMC’s health insurance arm, UPMC Health Plan. It would pit UPMC’s plan against Capital BlueCross and Highmark, which dominate central Pennsylvania with 75% of the market. Aetna claims the rest.
Penetration into the Harrisburg region could serve as payback, too, against Highmark, which four years ago acquired Pittsburgh-based Allegheny Health Network, putting it in direct competition with UPMC’s treatment and coverage operations.
Partnerships and affiliations are on the rise in healthcare and offer academic health systems and other well-known organizations the chance to spread their brands around the country without assuming the costs of an actual acquisition. Part of what’s driving it is consolidation in the hospital industry and the financial challenges for independent hospitals to continue and thrive.
In December, reports surfaced about a possible partnership between Wayne Healthcare, the last independent hospital in the Miami Valley region of Ohio, and six-hospital system Premier Health. The deal would allow Wayne to retain local control while ceding some representation on its board.
There has also been an uptick in cross-sector partnerships aimed at advancing public health — from initiatives to improve care delivery for patients with complex social and health needs to programs that reduce emergency room utilization.