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For Penn State Health, a higher profile

$1B investment with Highmark poised to enhance community-based care

On Monday leaders signed the partnership agreement between Penn State Health and Highmark Health. From left, Dr. A. Craig Hillemeier, Penn State Health CEO; David Holmberg, Highmark Health president and CEO; Deborah Rice-Johnson, Highmark Inc. president; and Eric Barron, Penn State University president. - (Photo / Submitted)

Leaders of Highmark Health and Penn State Health are sharing few details about the $1 billion they pledged to invest in Central Pennsylvania under their new alliance, but wherever it goes, the money is sure to give Penn State a higher health care profile.

The health system has added pieces over the years to complement its flagship academic hospital, the Penn State Health Milton S. Hershey Medical Center.

But Penn State Health appears to have its eyes on a bigger share of the region’s health care market through new primary care, specialty care and acute-care hospital settings.

As well it should, suggested Patrick Michael Plummer, a professor and chair of the health administration department at Penn State Harrisburg.

“There’s not many single academic medical centers across the country that aren’t working to become the anchor of a larger acute-care space,” Plummer said.

The system has taken steps toward building more of a network beyond its biggest hospital, in Derry Township, Dauphin County. Earlier this year it bought independent doctors group Physicians’ Alliance Ltd., which has doctors in Lancaster, Dauphin and York counties.

But Penn State Health CEO Dr. A. Craig Hillemeier acknowledged the system needs more of a community health network.

Joel Berg

“We’ve really been a stand-alone medical center,” he said.

More steps will be taken through Penn State’s new partnership with Highmark Health. Among the partnership’s goals is developing a community-based care network

Highmark has experience operating – and expanding – a community health care system in western Pennsylvania through its subsidiary Allegheny Health Network.

In October Highmark and Allegheny said they would spend $700 million on new facilities, including so-called “neighborhood hospitals,” which range in size from 15,000 to 60,000 square feet, feature 10 to 12 inpatient beds and offer a variety of clinical services.

“We’ve learned a lot as an integrated health company,” said Deborah Rice-Johnson, president of Highmark Inc., a Highmark Health subsidiary. “We plan on doing some of that together with Penn State Health.”

Highmark Health CEO David Holmberg said his organization and Penn State Health are still studying what is needed in Central Pennsylvania. But they are not trying to match UPMC’s leap into the region.

Joel Berg

“This is not about parity,” Holmberg said. “This is about doing something different.”

However Highmark and Penn State spend $1 billion, it is likely to elevate health care and boost the economy in Central Pennsylvania, said Plummer, especially when added to the $1.5 billion UPMC has promised to invest.

The region also will benefit from having more balance among the health care providers serving its residents. Without a partner, Penn State Health risked losing ground to UPMC Pinnacle, Plummer said.

“I think that’s where the reality is,” he said. “There’s no other hospitals they can buy in the area. They have to have a broader market presence to at least come up with some kind of footprint that can compete with UMPC Pinnacle in a way that’s different.”

Greater competition could help lower costs and increase quality, said Diane Hess, executive director of the Lancaster-based Central Penn Business Group on Health, which represents employers.

Planned investments in the region, meanwhile, will bring sophisticated care closer to residents, she said. But as organizations grow, one challenge will be ensuring health care retains a personal touch.

“It has been a lot of consolidation,” Hess said. “And I think there is a concern about losing touch with the actual purchaser and the person who’s going in for care and how to make sure that they continue to get good quality care.”

Another potential downside is a replay of the situation in Pittsburgh, where competition between Highmark and UPMC led to lawsuits and restrictive networks.

“It would be a shame if that happened in the Harrisburg area,” said Jaan Sidorov, CEO of The Care Centered Collaborative, a consulting firm founded by the Pennsylvania Medical Society to help independent physicians.

So far, however, the players appear not to be drawing fresh battle lines in Central Pennsylvania, Sidorov said. He would prefer to see them compete on quality, price, patient satisfaction and professional well-being of providers, not by restricting access.

“Patients will ultimately be served when the physicians in the geographic service areas have latitude to point and direct and help patients go to the best places where they can be served,” Sidorov said.

Joel Berg
Joel Berg is editor of the Central Penn Business Journal. Born in Philadelphia, raised in Northern Virginia and now living in York, he's a graduate of Franklin & Marshall College and the University of Maryland. Have a question or story idea? Email him at [email protected].

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