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Highmark beefs up for UPMC battle

| Wednesday, July 10, 2013, 12:01 a.m.

With the final piece of its new hospital network in place, Highmark is gearing up to take on UPMC, Western Pennsylvania's largest health system.

It shelled out about $1.6 billion to buy seven hospitals, including the just-completed acquisition of St. Vincent Health System in Erie, a number of doctor practices and other components. But is its expansion complete?

Spokesman Aaron Billger would only say that the company, which also owns the state's largest health insurer, will “work with the community to determine health care needs and then develop capabilities to meet those needs.”

Highmark has said it's building the health system, called Allegheny Health Network, to give its insurance customers a lower-cost option to UPMC, the largest hospital network in Western Pennsylvania. In addition to St. Vincent, Highmark has purchased the five-hospital West Penn Allegheny Health System, Jefferson Regional Medical Center and Premier Medical Associates, a large Monroeville physician practice. It also is building a $100 million outpatient center in Pine.

But more important to Highmark's success than buying hospitals and building outpatient clinics is whether it can achieve health-care savings for its insurance members, said James McTiernan, a health-care consultant with Triad Gallagher, a Downtown benefits consulting firm.

UPMC will become out-of-network for members of Highmark's insurance arm, Highmark Health Services, starting in 2015. Without that access, members could drop the insurer. But they could be persuaded to stay if Highmark's insurance is less expensive than competitors with in-network access to UPMC, McTiernan said.

“As a byproduct of success in the insurance business, their health-care delivery (system) will do well because it will be feeding them patients,” he said.

To raise the profile of Allegheny Health Network among the general public, Highmark introduced a new advertising campaign on Tuesday with the tagline, “Today is a new day,” CEO William Winkenwerder said during a news conference in Erie.

“We have a great deal of work ahead of us,” he said. “The long-term benefits to the community are substantial.”

UPMC has said it cannot continue reimbursement contracts with Highmark Health Services beyond the end of 2014 because the insurer intends to steer patients away from UPMC hospitals and doctors.

It has argued in its own advertising campaign that Highmark's plan to steer 40,000 UPMC patients to the Allegheny Health Network would cause it substantial financial harm.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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