AHN signs deal to pull Heritage Valley hospitals into its network

Allegheny Health Network and the much smaller Heritage Valley Health System have signed a merger agreement, marking the latest push by the Pittsburgh region’s biggest hospital systems to expand their reach.

Officials on Thursday announced the deal, which requires state and federal government approval. It would bring Heritage Valley hospitals in Sewickley and Brighton, Beaver County under the Allegheny Health Network banner.

The announcement comes just one day after Allegheny Health Network rival UPMC said it’s entering talks to acquire Trinity Health System’s four hospitals in Eastern Ohio.

The addition of the Heritage Valley facilities will expand Allegheny Health Network to 16 hospitals and give it a substantial footprint of primary care providers, clinics and specialists across Beaver County and the western reaches of Allegheny County.

Allegheny Health Network will also pick up a doctor’s office in Calcutta, Ohio, about an hour west of Pittsburgh, marking its first foray into that state, according to Mark Sevco, AHN’s president and CEO.

“By joining AHN, Heritage Valley and its patients will gain access to a wider network of resources, expertise and clinical capabilities,” Sevco said. “Together, we can leverage our collective strengths.”

Sevco declined to comment on whether UPMC’s expansionist strategy drove his organization to pursue Heritage Valley.

Taken together, the moves suggest these health care systems see opportunity west of Pittsburgh. Of the relatively few Southwestern Pennsylvania communities showing growth in census estimates, many are within Heritage Valley’s vicinity.

Red ink

Heritage Valley has struggled as of late. In June, the system closed its Kennedy hospital, just six years after purchasing it. It has also faced years of declining credit ratings and operating losses, finishing last fiscal year $56 million in the red.

Maintaining independence has been difficult, said Norman Mitry, president and CEO of Heritage Valley Health System.

Several similarly challenged hospitals and small networks in Western Pennsylvania have joined with the region’s two major players, Allegheny Health Network and UPMC, in recent years.

“The truth be known, we probably should have more aggressively done this sooner,” Mitry said.

Mulling a merger

Heritage Valley Health System has kicked around a merger for more than a decade and began discussions with multiple potential buyers when covid-19 struck, according to Robert Terwilliger, chair of the system’s board.

Talks began in earnest with Allegheny Health Network about a year ago.

Bill Toland, an Allegheny Health Network spokesman, declined to say how much his organization is paying to acquire Heritage Valley. Sevco did tell TribLive, however, the new affiliation will lead to $285 million in investments over the next decade.

It will also lead to a reevaluation of Heritage Valley’s nine joint ventures with other providers, including the UPMC Hillman Cancer Center at the Beaver County hospital, he noted.

Ezz-Eldin Moukamal, Allegheny Health Network’s chief medical officer at Forbes Hospital, said the network is especially eager to absorb Heritage Valley’s strong cardiac care capabilities and wide network of primary care doctors.

No formal integration can take place until the deal receives regulatory approval from the Pennsylvania Attorney General’s Office and the Federal Trade Commission, but the organizations can make plans for how they’ll combine.

Officials say they’ve been in conversation with Gov. Josh Shapiro and state Attorney General Dave Sunday about the agreement.

The approval process is expected to take up to a year.

Allegheny Health Network last expanded its hospital footprint in 2019 by acquiring Grove City Medical Center.

Allegheny Health Network has about 23,000 employees and more than 2,600 doctors. Heritage Valley has more than 3,300 employees and more than 600 physicians.