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ER return, interim CEO set in hospital pact

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By Luis Fábregas and Alex Nixon,
Tuesday, Nov. 1, 2011

The emergency department at West Penn Hospital in Bloomfield will reopen early next year, officials at Highmark Inc. and West Penn Allegheny Health System will announce today.

The hospital, which downsized in recent years and closed its emergency room in January, is expected to be fully operational in 2012, the Tribune-Review has learned.

Highmark officials also will announce that Dr. Keith Ghezzi, a physician who works for health system management firm Alvarez & Marsal in Washington, will be named interim CEO of the six-hospital system, which is the region's second largest and includes flagships Allegheny General and West Penn. A team from Alvarez & Marshal will fill other management roles for the health system.

Those actions will be announced at a news conference at Highmark headquarters, Downtown, which it called to report that a signed agreement has been reached on the pending $475 million acquisition of West Penn Allegheny by the state's largest health insurer.

Officials from the two organizations signed a long-delayed definitive agreement Monday afternoon that spells out the terms and conditions of the arrangement. The agreement must now be approved by state regulators, including the Pennsylvania Department of Insurance, the Internal Revenue Service and the state's attorney general.

Highmark, which has more than 3 million members in Western Pennsylvania, announced June 28 it was taking over money-losing West Penn Allegheny. Last week, West Penn Allegheny reported a $51.8 million operating loss for the fiscal year ended June 30.

As part of Highmark's acquisition of West Penn Allegheny, the insurer gave $50 million to West Penn, which likely would have closed without the infusion of money. The hospital is widely known for its burn care unit, as well as its obstetrics and neonatal intensive care unit.

Highmark has said it will provide $350 million in grants to West Penn Allegheny and $75 million to help it start a medical school.

Reached by telephone by the Tribune-Review yesterday, Ghezzi confirmed he would be in Pittsburgh today but declined to discuss his role at West Penn Allegheny.

Ghezzi, who has worked as an emergency medicine physician, joined Alvarez & Marsal in 2009 after 10 years of running his own health-care consulting company specializing in operational and financial turnarounds, according to his company's website. His primary areas of focus include health systems, large hospitals and physician group practices. He was interim CEO of Forum Health, a three-hospital system based in Youngstown, Ohio.

A graduate of Washington and Jefferson College, Ghezzi and Highmark CEO Kenneth Melani are members of the college's board of trustees.

In a move expected after they a signed agreement, West Penn Allegheny Health yesterday asked a federal court judge to allow it to drop Highmark from a federal conspiracy lawsuit it filed accusing the health insurer and UPMC, the region's largest health care system, of working together to put it out of business.

West Penn Allegheny Health's motion asks U.S. District Court Judge Arthur Schwab to approve a new complaint that accuses only UPMC of causing its financial decline over the last decade. West Penn Allegheny now says it was UPMC's "predatory tactics" alone that led to its problems.

"Since West Penn Allegheny was formed ... Pittsburgh's dominant hospital system, UPMC, has relentlessly sought to monopolize the market for (health care) in the Pittsburgh community by reducing competition and raising prices at the expense of the community's employers, consumers and patients," the amended complaint states.

UPMC spokesman Paul Wood said Highmark and West Penn Allegheny should spend less time in court and more time figuring out how to compete with UPMC, which operates 20 hospitals in the state.

"Now that Highmark is about to acquire it, WPAHS has abruptly and not surprisingly abandoned its frivolous conspiracy theory," Wood said in an e-mail. "... This new complaint is nothing more than public relations nonsense."

West Penn Allegheny's lawsuit was filed in April 2009 and dismissed by Schwab six months later. An appeals court in late 2010 overturned Schwab's ruling and sent the case back to his court, a decision Highmark and UPMC each appealed to the U.S. Supreme Court. The Supreme Court earlier this month refused to hear the case.

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