June 21, 2024
Pennsylvania hospital merger moves forward

After some debate and speculation, UPMC’s acquisition of the Washington Health System cleared one remaining hurdle.

Pennsylvania Attorney General Michelle Henry has approved UPMC’s planned acquisition of the Washington Health System.

Pennsylvania hospital merger moves forward

Pennsylvania Attorney General Michelle Henry signed off on the deal this week. And on Saturday, UPMC announced that Washington Health System has joined the organization.

UPMC says it will invest $300 million over the next 10 years into Washington’s two hospitals to improve facilities and services.

UPMC first announced plans to acquire Washington Health System last June, and one year later officials say the deal is done. Union leaders have spoken out against the deal. Based in western Pennsylvania, the Washington system has said it is losing millions of dollars and joining UPMC is critical to the survival of the organization.

In her statement announcing her approval of the deal, Henry noted the concerns about preserving access to care in the region.

“This transaction will keep Washington Hospital open and available to thousands of Pennsylvanians,” Henry said in a statement. “It is essential that the transaction promotes the interests of patients, hospital employees, and the community. My office did a comprehensive review and reached this agreement with UPMC and Washington Health Care Services to ensure those protections are in place.”

Under the deal, Washington Health System must negotiate with any interested health insurance plans, the attorney general’s office said.

The office also said Washington is barred from “exclusive contracting, and all-or-nothing clauses in its new contracts with health insurance plans.” Washington can’t restrict an insurer from contracting with other healthcare providers. The attorney general’s office said those provisions will ensure subscribers will get cheaper, in-network access to Washington’s doctors.

Washington Health System welcomed getting the agreement from the attorney general’s office, and that it is now a part of UPMC.

UPMC said Saturday that it has completed the acquisition of Washington Health System in western Pennsylvania.

UPMC operates 40 hospitals and 800 other healthcare locations. Washington Health System operates its flagship 278-bed Washington Hospital in Washington, Pa., along with a 49-bed hospital in rural Waynesburg, Pa. Now, the two hospitals will be known as UPMC Washington and UPMC Greene.

Brook Ward, president of UPMC Washington and UPMC Greene, said in a statement Saturday that he is “elated” the affiliation is complete.

“This affiliation protects the vitality of an essential community asset and solidifies a healthy future for Washington and Greene counties for generations to come,” Ward said in a statement.

Leslie Davis, president and CEO of UPMC, said in a post on LinkedIn that she is “thrilled” to welcome the hospitals into the system.

“UPMC has a long, successful track record of affiliations with like-minded organizations. We know how essential these hospitals are to this region to preserve needed health care services and livelihoods of thousands touched by them, and we are thrilled to welcome UPMC Washington and UPMC Greene to UPMC,” Davis said in a statement.

SEIU Healthcare Pennsylvania has consistently raised concerns about the deal. In an op-ed last September, the group voiced fears of union workers seeing a reduction in wages and also pointed to UPMC cutting services elsewhere.

In a statement to the Observer-Reporter newspaper, SEIU members said the attorney general’s agreement offers some important protections, but they said it should have included more explicit provisions to ensure that no jobs or services are cut.

In recent months, Washington system bluntly said if the deal didn’t go through, it’s possible that the organization would shut down.

In an FAQ online, the system said, “WHS has been operating at a budget deficit of $30 million since 2022. If we don’t act, WHS could be forced to spend the next two to three years cutting services and reducing costs before facing the inevitable. That’s potentially 2,700 local employees without a job and a loss of essential healthcare and medical services this community needs.”

Pennsylvania lawmakers and Washington employees rallied in the state Capitol building in Harrisburg in April to urge support for the deal. “Political bickering and petty fighting have found a way to put this critical merger at risk,” Pennsylvania State Rep. Tim O’Neal, R-Washington, said at the rally.

JoJo Burgess, the Democratic mayor of the city of Washington, said in April, ““We have to save a legendary rural hospital in southwestern Pennsylvania. We risk almost 300,000 people not having health care and having to travel into Pittsburgh to try to take care of themselves.”

Washington said UPMC has pledged to maintain services for residents in the region.

“UPMC promises to preserve the long-term health and vitality of WHS and the communities it serves for many years to come,” Washington said.

UPMC said Washington will maintain a local board of directors, including 11 members of the two hospitals and new members appointed by UPMC.

The systems said a formal celebration will take place in the coming days.

The hospital industry is seeing more mergers and acquisitions over the past 18 months, and financial distress is a driving factor in some of those deals, according to Kaufman Hall, a healthcare consulting firm. In 2023, there were 65 announced hospital deals, up from 53 transactions in 2022.

Hospital analysts expect to see more deals in the future, and they say some transactions will involve hospitals looking for partners to stay afloat.

Note: This story was updated Saturday to include the news that UPMC and Washington Health System said the deal is now complete.

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