University of Pittsburgh Medical Center said it will offer early buyouts to older workers in attempt to manage the shifting costs in new healthcare reimbursement models as the market shifts to commercial payers beyond Highmark Blue Cross and its own health plan.
The move could affect more than 5 percent of UPMC’s workforce, the 3,500 UPMC employees who are at least 60 years old and have 10 years on the job. UPMC is Pennsylvania’s largest health system and largest private employer.
[Also: UPMC will stop accepting Highmark Health’s Medicare Advantage as in-network]
"This innovative program provides employees a generous severance with medical and dental benefits and a one-time cash payment that can help them purchase additional medical benefits until they are eligible for Medicare," UPMC executives told employees, according to the Pittsburgh Business Times.
"This program both honors and respects long-term staff members who are ready to move to the next phase in life and, simultaneously, helps achieve cost-savings for UPMC by adjusting our workforce to meet the demands of the healthcare marketplace."
While the 22 hospital, 3,500-employed physician UPMC health system is not at risk of losing money, the post-Affordable Care Act healthcare economy in western Pennsylvania is growing more competitive as rival Highmark Health, the state’s largest insurer, tries to grow the seven-hospital Allegheny Health Network. Highmark acquired the distressed nonprofit system two years ago, moving the region towards becoming a duopoly. The competition has gotten ugly, with disputes resulting in long-standing UPMC provider networks being cut off for Highmark members, including Medicare Advantage beneficiaries.
[Also: Highmark lawsuit against UPMC alleges false advertising]
After UPMC’s in-network contract expired at the end of 2014, UPMC said it experienced “minimal” financial impact for the first quarter, although its revenue was just about flat at $1.4 billion and operations income dropped by more than 50 percent to $20 million.
Twitter: @AnthonyBrino