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West Penn pressured to re-engage Highmark

James Knox | Pittsburgh Tribune-Review
Jack Isherwood, chair of West Penn Allegheny Health System board of directors (center), is flanked by WPAHS board member David McClenahan (left) and interim president and CEO Keith Ghezzi, MD at a press conference announcing the system's move from an affiliation agreement with Highmark Friday September 28, 2012 at the health system's offices on the North Side.

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Wednesday, Oct. 10, 2012, 12:01 a.m.
 

A group of top doctors at West Penn Allegheny Health System is demanding that the board of directors fire the interim firm managing the system and return to negotiations with health insurer Highmark Inc., the Tribune-Review has learned.

The doctors, who include more than a dozen leaders of the system's medical and surgical departments, have signed a letter that was to be delivered this week to board Chairman Jack Isherwood expressing their growing dissatisfaction with the failed negotiations. Complaints have been raised individually or in small groups during town hall meetings and private discussions with board officials, several physicians told the Trib.

The doctors are particularly frustrated with turnaround consulting firm Alvarez & Marsal, who the doctors believe is responsible for the recent breakdown in talks between Highmark and West Penn Allegheny. In their letter, the doctors state they want the board to get rid of the consultants immediately.

“There's been quite a lot of unhappiness,” said one of the physician leaders, who spoke on the condition that his name not be used. “There is nobody supportive of the interim management.”

The doctors also said in the letter they want representation in any future negotiations between West Penn Allegheny and Highmark.

If their demands aren't met, the physicians told the Trib that the next step will be to deliver the board and management a “no-confidence” vote.

“The physicians don't want to send the message that they hate the board,” one physician explained. “The purpose is to apply enough pressure on them to act.”

Isherwood could not be reached for comment on Tuesday.

West Penn Allegheny spokeswoman Kelly Sorice said Isherwood had not received any letter from system-wide physician leadership.

“It would be strange to receive such a letter, given that four of our (medical department) chairmen are members of the board of directors and actively participated in the board's unanimous vote to hold Highmark accountable for its breach of the affiliation agreement,” Sorice said.

The physicians who spoke to the Trib said the doctors who are members of the board have not been directly involved in the negotiations with Highmark.

Dr. Keith Ghezzi, a principal at the consulting firm and the system's interim president, is responsible for a series of ill-planned decisions about the future of the five-hospital system, the sources said. Those decisions include pulling out of the deal with Highmark and accusing the insurer of a breach in the terms of the proposed $475 million acquisition. The consultants have fired several long-time staffers, the physicians said.

The physician leaders told the Trib that Ghezzi and his team have not acted in the best interest of the system and are making decisions simply to make money.

“Their self-interest supersedes the community's interest,” one of the physician leaders said. “It's a problem when you don't have skin in the game. We've had a lot more value extracted than created.”

Ghezzi, who was appointed interim CEO in November, could not be reached for comment.

Sorice said West Penn Allegheny's board hired Alvarez & Marsal at the urging of Highmark and its board.

“A&M is now implementing the turnaround plan at West Penn Allegheny that Highmark endorsed and submitted to the Pennsylvania Insurance Department,” she said. “A&M is meeting, or exceeding, the expectations that were set for them.”

Sorice emphasized West Penn Allegheny's position that board officials are willing to renew talks with Highmark. She said Highmark has not agreed to any such discussions.

Isherwood recently reached out to Highmark board chairman Robert Baum to ask when discussions could restart, Sorice said, but he never heard back from Baum. Baum could not be reached for comment.

“By all means, we would like Highmark to come back to the negotiating table,” Sorice said.

Since the deal between Highmark and West Penn Allegheny collapsed about two weeks ago, physicians and workers throughout the system have expressed concern about the health system's future. The system, which includes Allegheny General Hospital in the North Side and West Penn Hospital in Bloomfield, has posted steady losses in the past five years, including an operating loss of $51.8 million in fiscal year 2011.

Top West Penn Allegheny physicians who spoke with the Trib say they are being courted by rival UPMC and other health care providers nationwide. They say they've stuck around because they value West Penn Allegheny's commitment to quality and are eager to create a viable alternative to UPMC.

If the deal with Highmark falls through, it is likely many of them will choose to leave, the physicians said. They said they don't believe a for-profit organization would be interested in the Western Pennsylvania market.

Luis Fábregas is a staff writer for Trib Total Media. He can be reached at 412-320-7998 or lfabregas@tribweb.com.

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