Western Pennsylvania's largest health insurer Highmark took another step toward building a comprehensive provider network in the region with the announcement this week of a $275 million commitment to Jefferson Regional Medical Center.
Under the terms of the proposed strategic affiliation, Highmark has agreed to commit $75 million to Jefferson's Foundation to support improved community health and wellness care; an investment in a new emergency department at Jefferson' Bethel Park campus; and expanded clinical services including neurosurgery and gynecology. Highmark will also gain control of 75 percent of Jefferson's board of directors.
"This partnership demonstrates the commitment of Highmark and Jefferson to working together to create a more modern, efficient healthcare system," said J. Robert Baum, Highmark chairman in a press release. "It keeps care in the community, creating greater convenience for patients and maintaining the economic vitality of the South Hills."
The announcement is the latest strategic maneuver by Highmark designed to build a geographically diverse healthcare network as it looks to minimize the impact of the anticipated expiration of its contract with the region's dominant provider network, the University of Pittsburgh Medical Center (UPMC).
Last year, UPMC announced plans to acquire the troubled West Penn Allegheny Medical System, which has facilities primarily in the north and northwest areas of the Pittsburgh metropolitan area. That deal is still awaiting approval from state insurance regulators and the Pennsylvania Attorney General's office; approvals that the newest deal with Jefferson Regional – whose facilities are located in the southern metro area – will also need to secure.
The deal with Jefferson is not seen as a rescue of a failing system as is the case with West Penn Allegheny, which has suffered through years of financial difficulties. Nonetheless, when combined under the Highmark umbrella with West Penn, it could help it better compete against UPMC in the fractious Pittsburgh market.
"This decision to align with Highmark is a recognition that we share a common vision to meet the healthcare needs of the southern region of western Pennsylvania," said John Dempster, CEO of Jefferson Regional Medical Center, in a press conference announcing the alliance.
With its newest commitment to Jefferson Regional, Highmark is showing that it will not hesitate to tap the nearly $1 billion the company has reserved with the express purpose of building a broad-based integrated healthcare network in the region.
Jefferson Regional is merely the latest building block in the effort to have greater control over the providers that serve its health plan members. The insurer now intends to focus on the development of as many as 10 outpatient clinics through the region.