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Highmark acquires health system

Highmark Inc., a Pennsylvania insurance company, on Monday signed an agreement with West Penn Allegheny Health System Inc. to take over the organization, said J. Robert Baum, chairman of the board of Highmark.

The two companies met in June and published a term sheet, reviewing the intention and steps to reach an affiliation, he said.

“The goal for all of us was … to preserve the West Penn Allegheny Health System as a choice for the Pittsburgh region,” he said.

The Pittsburgh-based health system has faced challenges with its finances and operations for some time, said Keith Ghezzi, interim president and CEO of West Penn Allegheny Health System.

Highmark in June provided the health system with an initial grant of $50 million to sustain and strengthen West Pennsylvania and Forbes Regional hospitals in Allegheny County, according to a news release.

Highmark committed up to $475 million for the acquisition, pending regulatory approval, according to the release.

“We believe this partnership will create a highly efficient and lower-cost health care system, expand access to additional clinical services for patients and enhance medical education and training for physicians and other health care professionals,” Jack Isherwood, board chairman of the West Penn health system, said in a statement.

Highmark has appointed John Paul to head the provider business unit, which could involve other provider systems, Highmark spokesman Michael Weinstein said.

The next steps in the affiliation process include approvals from the Pennsylvania Insurance Department, the state attorney general’s office and the IRS, Baum said.

The health system under the new affiliation will focus on partnering with physicians, reinstating services, establishing a trauma program and growing specialty services, Ghezzi said.

“It’s taken a lot of hard work to get to this point; we have much more to accomplish,” Highmark President and CEO Kenneth Melani said.

The health system operates six hospitals and seven outpatient care centers in western Pennsylvania, according to its website.

Highmark also is the parent company of East Pennsboro Township, Cumberland County-based Highmark Blue Shield.

Holly White

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