UPMC plans to acquire Washington Health System

UPMC is acquiring Washington Health System, adding to the Pittsburgh health care giant’s massive footprint.

WHS announced the deal on Tuesday, saying the two health care providers have signed a nonbinding letter of intent to integrate the Washington-based health system into UPMC.

“Our primary focus is to ensure the residents of Washington and Greene Counties have local access to high-quality health care that is sustainable into the future,” Brook Ward, president and CEO of WHS, said in a statement.

“After careful consideration and analysis, we believe the best path forward is to affiliate with UPMC to achieve that goal,” Ward added. “We currently have numerous clinical arrangements and joint ventures with UPMC, which have provided our patients with exceptional care over the years.”

In a subsequent interview with the Tribune-Review on Tuesday, Ward said financial concerns common across the health care sector weighed on WHS.

“Even before the pandemic, the economics of health care, particularly for hospitals, are extremely tough,” he said. “We’re seeing a downward trend in the financial viability of health care organizations across the board. Then you add into the mix the pandemic, workforce issues, inflation, and it is just accelerated.”

Ward said the health care system looked for ways to continue operating independently, but didn’t see “low-hanging fruit” to reduce costs within the organization.

In late 2022, the hospital board requested proposals to affiliate with a larger health care provider. UPMC and rival Allegheny Health Network were among the suitors.

Paul Wood, a UPMC spokesman said, “UPMC looks forward to pursuing this affiliation that would integrate WHS into the UPMC system and preserve and enhance high-quality health care services for communities served by WHS. As WHS and UPMC move forward with the process, including a customary due diligence period and regulatory review, we will keep our stakeholders and community updated as there are developments to share.”

The affiliation is subject to customary regulatory approvals.

The state attorney general’s office said the agency will be looking into the proposal between UPMC and WHS.

“This transaction will be thoroughly reviewed within the antitrust and charity parameters,” said Brett Hambright, a spokesman for the AG’s office.

A report released in January said UPMC has gained too much share of the market and has too much power.

The American Economic Liberties Project, which produced the report, is a nonprofit group that formed to research consolidated corporate power and advocate for stronger antitrust regulations. At the time, UPMC questioned the methodology of the report.

Washington Health System, which employs more than 2,000 people, provides services at its 278-bed hospital in Washington and the 49-bed WHS-Greene Hospital in Waynesburg. WHS also operates more than 40 off-site locations throughout three counties and other outpatient facilities. All of WHS’ operations are included in the deal.

The WHS board unanimously approved the move on June 1.

The letter of intent means WHS and UPMC have agreed to conditions of affiliation and to negotiate a definitive agreement.

UPMC and WHS have collaborated in the past. One joint partnership in local cancer treatment with UPMC Hillman Cancer Center was based at WHS Washington Hospital. UPMC Children’s Hospital of Pittsburgh, Express Care and other specialty clinics also are on the campus of WHS Washington Hospital. UPMC’s Heart and Vascular Institute provides vascular surgery services throughout the communities WHS serves. Onsite neonatal care is provided by UPMC Children’s.

WHS Washington Hospital also was one of the original members of the UPMC Health Plan when it launched 26 years ago.

Meanwhile, Allegheny Health Network and its parent company Highmark said it is still looking to invest in the southwestern corner of the state.

“AHN and Highmark Health have a long history of supporting and providing outstanding health care services for the residents and communities of the greater Washington County region, and that commitment remains stronger than ever,” Highmark said in a statement. “We have been exploring a variety of options for how we can further invest in the health of the community and best serve its health care needs in the years ahead and for generations to come.”

Ward said major changes aren’t expected for WHS’s operations or staffing in the region.

“There would be a 10-year commitment to keep health care services in Greene County, to keep the Washington Hospital where it is today and actually grow the services here, not shrink them,” he said. “Along with a commitment to our foundation and other services that are important to us, that will be baked into the definitive agreement.”

In this sector, where workforce shortages are common, Ward said hospital systems need all the staff they can get.

“I would be shocked if there’s any layoffs because they have so many vacancies, they’re going to need people everywhere,” he said.

UPMC has grown exponentially in the past decade, expanding from a system of 12 hospitals into a network of 40 hospitals and 800 doctors’ offices and outpatient sites. UPMC Insurance Services covers 4.5 million members. The system employs about 95,000.

Consolidations have been occurring throughout the health care sector, and Western Pennsylvania is no exception.

Allegheny Health Network has been broadening its presence while neighboring West Virginia University Health System is reaching into Fayette County.

In 2022, Excela Health and Butler Health inked an intent-to-merge agreement to join five hospitals in Westmoreland, Butler and Clarion counties.

Penn Highlands Healthcare recently merged with Highlands Hospital in Connellsville and Monongahela Valley Hospital in Carroll Township, Washington County.

In 2015, UPMC ran into a snag with former state Attorney General Kathleen Kane as it planned to invest $80 million in what was then Jameson Health System, based in New Castle, as part of a merger.

Kane’s office rejected the merger out of concern that it could reduce competition in the region and drive up medical costs. The office then provided a list of more than 20 unnamed for-profit and nonprofit providers for Jameson to pursue.

Eventually, UPMC prevailed after an independent arbitrator approved the deal in 2016.