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Highmark, Penn State partnership enters second year

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Penn State Health Milton S. Hershey Medical Center
Penn State Health Milton S. Hershey Medical Center - (Photo / )

A year has passed since Highmark Health and Penn State Health pledged together to invest $1 billion in improving health care services in Central Pennsylvania.

The non-contractual partnership was forged with a goal of creating new primary, specialty and acute care facilities, developing new health care insurance products and introducing methods to manage data between the two organizations. Anchoring these new developments in the joint health network would be Penn State Health Milton S. Hershey Medical Center and Penn State Children’s Hospital.

The partnership began showing dividends this year, according to Steve Massini, executive vice president of Penn State Health.

“We’ve had a considerable amount of success in terms of acquisitions of physicians groups and specialists,” Massini said, adding that the acquisitions helped both organizations make strides to building out the community network they have been working toward.

Over the last year, Penn State Health has acquired AndrewsPatel Hematology/Oncology in Lower Paxton and Hampden townships and Berks Cardiologists Ltd. in Berks County. The health system also finished the first phase of its expansion of the children’s hospital to add three new floors and completed preparations to open its new Lime Spring Outpatient Center  in East Hempfield Township, Lancaster County.

The Lime Spring center, opening in January, will house five current Penn State Health practices along with a number of new specialty services that the organizations felt were missing in the area.

Dan Day, senior vice president of Highmark Blue Shield, said that Highmark was able to bring additional data that helped Penn State Health identify gaps in services in the region. A group of both Highmark and Penn State Health officials has been meeting biweekly to research those gaps. Massini said that Highmark’s data from its customers gave the companies an outline of what was needed at Lime Spring.

The Penn State Cancer Institute located at the Hershey Medical Center, also received a $25 million investment from Highmark, which Day said is an example of the impacts Highmark can make in health care beyond providing health insurance.

Highmark President Deborah Rice-Johnson, CFO Karen Hanlon and Chief Legal Officer Thomas VanKirk joined Penn State Health’s board in February as part of the partnership, increasing the board from 10 to 13 members.

While Day and Massini both see the partnership's first year as a success, it may be too early to tell, according to Lawton Burns, a professor of health care management at The Wharton School of the University of Pennsylvania. Burns said that partnerships between insurers and hospital systems have traditionally failed to give the organizations involved a competitive advantage.

“If you are an insurer and you strike a deal with a hospital, rival insurers may not want to send you patients to retaliate,” Burns said. “A rival insurer may not want to include you in their network anymore.”

Penn State Health spokesman Scott Gilbert said that partnerships allowing for vertical integration between health systems and their partners - designed to broaden the range of patient care - are increasingly common.

“Seeking out such arrangements is essential to ensuring that our patients continue to have access to the high-quality, affordable health care they need,” Gilbert said.

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Ioannis Pashakis

Ioannis Pashakis

Ioannis Pashakis covers health care and Lancaster County. Email him at ipashakis@cpbj.com.

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