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Politics & Government

Officials Want a Deadline for Highmark, WPAHS Merger Negotiations

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A group of public officials and community group leaders has asked the state's insurance commissioner to speed up the process of merger negotiations between health insurer Highmark and the West Penn Allegheny Health System by instating a deadline to file an affiliation agreement.

Dated Tuesday, the letter from State Senator Jim Ferlo and 15 other signatories suggests that the likelihood of a merger between Highmark and WPAHS is diminishing as time continues to pass with no agreement.

"We need some resolution. It's reaching the end of the year," said Ferlo in an interview. "The [health] system keeps bleeding. Employee morale has deteriorated. People are leaving the system. Many of us in the community and public officials don't feel there's enough of a sense of urgency on the part of the two parties to get this deal done."

In late 2010, the financially unsound WPAHS announced plans to save money by closing some departments of West Penn Hospital in Bloomfield. Less than a year later, Highmark committed to invest roughly $475 million into the destitute health system as part of a tentative new affiliation, while the insurer also cut ties with WPAHS's rival healthcare provider, UPMC. The merger with Highmark allowed WPAHS to reopen the closed hospital facilities.

However, after a leadership change at Highmark, the health insurer made changes to the original affiliation agreement with WPAHS -- changes that the hospital system didn't agree with, such as a mandatory WPAHS bankruptcy filing. This fall, Highmark sued the health system to prevent WPAHS from seeking merger agreements with other companies. In November, an Allegheny County judge ordered both companies to continue negotiating an affiliation agreement.

After more than a month, the group led by Senator Ferlo says it's time to "shake the cage" by demanding action from the two companies by a certain date. He said the one person with the power to do so is state Insurance Secretary Michael Consedine.

"We're prevailing upon him, as a consumer advocate, as the individual regulatory leader in this regard, to put his fist down and demand a response from the parties and some resolution," said Ferlo.

Public officials from all levels of government signed the letter of request, from US Representative Mike Doyle (D-PA) to Allegheny County Executive Rich Fitzgerald and Pittsburgh Mayor Luke Ravenstahl.