PinnacleHealth, UPMC move closer to union

New binding accord sets timeline for affiliation

A formal deal joining PinnacleHealth with the state’s largest health system is expected to be finalized in early fall, officials said Friday.

Harrisburg-based Pinnacle and the University of Pittsburgh Medical Center first announced in March that they had signed a letter of intent for a proposed affiliation.

That proposal has now been followed by a “binding integration and affiliation agreement,” PinnacleHealth spokeswoman Christina J. Persson told the Business Journal late Friday.

Its completion is subject to regulatory review and customary closing conditions, she added.

Financial terms were not released, and no further information was available, Persson said.

“We are pleased to sign this agreement, and we look forward to starting a new chapter of collaboration with UPMC,” Persson said Friday. “Together, PinnacleHealth and UPMC will bring expanded healthcare services and advanced quality initiatives to patients across central Pennsylvania.”

Systems compared

UPMC, which is affiliated with the University of Pittsburgh Schools of the Health Sciences, has more than 25 hospitals and about 600 doctors’ offices and outpatient sites. It also provides medical and behavioral health insurance for 3.2 million members. It is the state’s largest non-governmental employer, with a staff of 65,000.

UPMC’s operating revenues for the first nine months of fiscal 2017, reported in May, were $11 billion, with net income of $871 million.

Integration with PinnacleHealth would give western Pennsylvania-based UPMC a substantial presence in the midstate.

Pinnacle’s staff of about 8,000 serves a 10-county area at outpatient facilities and seven acute care hospitals, with 905 licensed beds.

Nonprofit PinnacleHealth recorded about $1.5 billion in patient revenue for the fiscal year ended June 30, 2016, according to its most recent annual report.

The organization’s roster of hospitals grew significantly in July, when Pinnacle acquired Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center in Lancaster County, Memorial Hospital in York County and Carlisle Regional Medical Center in Cumberland County from Tennessee-based Community Health Systems Inc., a for-profit company.

That transaction was worth about $231 million in cash, according to CHS’ most recent quarterly report to the U.S. Securities and Exchange Commission.

Pinnacle’s footprint is poised to expand even more.

In July, Pinnacle announced that it intends to affiliate with AllBetterCare Urgent Care Center, which operates two offices in Cumberland County and one in Dauphin County.

Meanwhile, an affiliation between PinnacleHealth and the 93-bed Hanover Hospital, in York County, also is expected to be finalized in September.

In a year of major announcements and expansions, it is perhaps easy to forget that a previous merger proposal did not end well for Pinnacle.

Last fall, Pinnacle and Penn State Health Milton S. Hershey Medical Center abandoned long-suffering plans to combine their organizations amid vigorous legal challenges from federal and state regulators concerned that the move would have limited competition in the midstate. Like Pinnacle, Hershey Med is based in Dauphin County.

Roger DuPuis
Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at rdupuis@cpbj.com.

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