Dive Brief:
- The University of Pittsburgh Medical Center and Pennsylvania-based Washington Health Care Services have moved one step closer to completing their combination, announcing this week that the systems have signed a definitive merger agreement.
- UPMC and Washington originally announced their intent to merge in June. Under the definitive merger agreement, signed last week, UPMC will absorb and rename Washington’s two-hospital system to UPMC Washington.
- Union leaders have criticized the deal, with the chapter president of SEIU Healthcare Pennsylvania at Washington arguing in an August op-ed that the merger with UPMC could lead to pay and staffing cuts at the Washington hospital.
Dive Insight:
The proposed merger, which is subject to regulatory approval, comes as federal regulators increasingly scrutinize hospital consolidation.
The Federal Trade Commission and Department of Justice this summer released new guidelines that could give regulators new means to target healthcare deals, especially vertical and cross-market acquisitions. The Biden Administration has been increasingly cracking down on healthcare consolidation as deals have steadily increased and research has shown hospital consolidation to raise prices.
The UPMC merger would combine Washington’s more than 2,000 employees and two hospitals — its flagship 278-bed facility in Washington, Pennsylvania and its 49-bed hospital in Waynesburg, Pennsylvania — with UPMC’s 40-hospital footprint.
Executives of Washington Health said in June that increased financial burdens stemming from the COVID-19 pandemic led the system to merge with UPMC. Soaring expenses stemming from staffing costs and inflationary pressures have recently caused nonprofit hospitals to record their worst-ever financial years.
“The Board and senior leadership of WHS have realized, that in today’s health care environment, we need to consider the long-term stability of our health system to continue to provide the quality health care services our local residents have come to expect,” said Dan Miller, chairman of Washington’s board of directors, in a release on the deal’s announcement.
But the merger has faced criticism from local unions and employees who accuse UPMC of lowering care standards, shuttering hospitals and laying off employees in Pennsylvania.
In an op-ed published in the Observer-Reporter, Melissa Duran, chapter president of union SEIU Healthcare Pennsylvania at Washington, pointed to hospitals that UPMC closed after acquiring them, including facilities in Braddock, Sunbury and Lancaster. One facility, UPMC Lock Haven was transitioned from a hospital into an outpatient emergency department after being acquired by UPMC.
For Washington’s part, the system said in its June announcement that it had no intentions to lay off employees at Washington, but added that “no company in healthcare, or any industry, can guarantee this.”