Highmark: We need contract with UPMC
Highmark Inc. executives acknowledged on Monday that a long-term contract with UPMC is essential to providing more than $1 billion to establish a competing hospital system with struggling West Penn Allegheny Health System.
Chief Financial Officer Nanette DeTurk said the pursuit of a contract with UPMC means it could take Highmark twice as long to return West Penn Allegheny to profitability if Highmark members can continue accessing UPMC facilities after the end of 2014, when current reimbursement contracts end.
The statement appears to support questions raised by the state Insurance Department, which is reviewing Highmark's plan to buy West Penn Allegheny, and state Sen. Don White, an Indiana Republican who chairs the Senate's Banking and Insurance Committee.
The insurance department on Friday questioned Highmark's ability to turn around West Penn Allegheny while pursuing a new contract with UPMC that allows the insurer's members to obtain treatment from the health system.
Highmark filed a response to state insurance regulators, assuring them a UPMC contract would not detract from its takeover of West Penn Allegheny. Highmark did not include financial projections the Insurance Department requested, but said it would do so by a March 8 deadline.
In a conference call with DeTurk, Highmark Chief Legal Officer Thomas VanKirk told reporters that more important than the speed with which Highmark turns around West Penn Allegheny is maintaining Highmark's financial strength.
“It is the enterprise financial viability that we're interested in,” said VanKirk.
Without a long-term UPMC contract, Highmark's insurance business, which is providing more than $1 billion to set up a hospital system to compete with UPMC, could be weakened, he said.
The length of time it takes to return West Penn Allegheny to profitability is “irrelevant” as long as the overall system — including Highmark's insurance business, West Penn Allegheny and other medical providers — remains strong, VanKirk said. Key to keeping the enterprise financially strong is not losing Highmark customers who might choose UPMC, the dominant medical provider in Western Pennsylvania.
In a letter to Highmark released Friday, White expressed concern “about the consequences a long-term insurance contract between Highmark and UPMC could have on Highmark's ability to execute the turnaround of WPAHS.”
White said Highmark won't be able to boost patient volume at the five-hospital West Penn Allegheny — essential to turning around its finances — as long as insurance customers can choose UPMC, which employs more than 3,300 doctors and owns 19 hospitals.
UPMC has said it has no interest in another contract with Highmark as long as the insurer intends to go into the hospital business.
UPMC maintains there's no way Highmark can succeed in fixing West Penn Allegheny when its insurance members have the option of choosing UPMC.
DeTurk said Highmark is designing insurance plans that — over time — would show customers West Penn Allegheny can provide less expensive and higher quality care than UPMC.
“That will be a big driver of folks back into the system,” she said.
West Penn Allegheny officials declined to comment.
“It's not UPMC's responsibility to solve Highmark's problems,” UPMC spokesman Paul Wood said.
UPMC insisted on an end to its contracts with Highmark because it's self-defeating to allow the insurer to profit on access to UPMC while building a competing health system.
“It's a bait-and-switch,” Wood said of Highmark's strategy of being able to sell plans that include UPMC, but then steer patients to West Penn Allegheny.
“They would flash access to UPMC,” he said. “But when the time comes that you need UPMC care, Highmark gets to tier and steer you away from UPMC and into West Penn.
“They have to do that in order to save West Penn, in order to give West Penn the volume they need.”
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Young adults drive home rental trend in Western Pennsylvania
- Government approves compromise on Corbett’s alternative Medicaid plan
- GM’s legal team targeted in federal investigation
- Auto market booming, but longer loan terms cause concern
- Banks’ earnings up 5.2% in 2Q
- Customers anxious for details about Highmark transition plan for W. Pa.
- Housing contracts rise as mortgage rates fall
- Abercrombie name to shrink from clothing
- JPMorgan boosts defenses against mounting cyberattacks
- Economy grew at brisk 4.2% rate in Q2
- Twitch.tv online network reveals value of video gaming market