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Highmark pushes ahead with supplier in Butler County

| Thursday, Jan. 31, 2013, 12:01 a.m.

Highmark Inc. has taken another step forward in the development of its integrated health system with the lease of space in Butler County for a company the insurer began to distribute pharmaceuticals and medical supplies.

Highmark, the state's largest health insurance company, in May announced the start of ProtoCo Supply Chain Partners, which will supply hospitals across Western Pennsylvania, most of which Highmark is in the process of buying for its new health system.

Last month, ProtoCo leased space in Jackson Pointe Commercial Park in Jackson Township, said Brian Goetz, executive vice president of Buncher Co., which owns the 180-acre business park.

Strip District-based Buncher expects to begin construction on a building for ProtoCo in March, with the goal of having the space ready for move-in around Aug. 1.

“This will be a distribution center providing pharmaceuticals and medical surgical equipment to our hospital partners,” Highmark spokesman Aaron Billger said.

ProtoCo employs 50 people at Highmark's Fifth Avenue Place headquarters in Pittsburgh and expects to bring the total to 80 before the end of the year, Billger said.

ProtoCo's hospital partners include St. Vincent Health System in Erie, Jefferson Regional Medical Center in Jefferson Hills, and the five-hospital West Penn Allegheny Health System, all of which Highmark is in the process of acquiring.

The West Virginia United Health System also signed on to ProtoCo's services, Highmark has said.

To compete against UPMC, Highmark is attempting to make its health system lower cost. ProtoCo is expected to save West Penn Allegheny $100 million in spending on medical supplies and pharmaceuticals during the next five years. It spends about $480 million a year on those purchases.

It also has selected people with UPMC experience to compete against their former employer.

Bill O'Connor is in charge of ProtoCo and reports to John Paul, Highmark's executive in charge of the new integrated health system.

O'Connor was corporate director of supply chain management for UPMC from 1984 to 2005, while Paul was a senior vice president of UPMC until 2003.

O'Connor, a Highmark contractor, is CEO of OC Reilly Inc., a health care consulting firm.

ProtoCo's distribution center is one of several new developments either under way or planned at Buncher's Jackson Pointe Commercial Park.

Under construction is a 43,000-square-foot United Parcel Service building,

Gary Wilson, along with Amy Brocato, both with Langholz Wilson Ellis, a Downtown commercial real estate firm, negotiated the Highmark lease.

The UPS facility could augment the established UPS' New Stanton location that serves as a major sorting operation, or hub, that processes about 400,000 packages daily and employs about 1,700 workers. The large building is spread over 49.6 acres and contains about 327,000 square feet — or about seven football fields.

UPS has a delivery and administration office on Beaver Avenue in Pittsburgh, and a delivery operation in Marshall. Both locations, combined, employ about 600 workers.

Sam Spatter is a staff writer for Trib Total Media. He can be reached at 412-320-7843 or sspatter@tribweb.com.

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