The ailing West Penn Allegheny Health System can be resuscitated whether or not Highmark Inc. and UPMC sign a long-term contract with each other, the insurer says in new financial projections filed with the state.
If the reimbursement contract between the two companies -- which allows Highmark insurance customers to use UPMC health care facilities -- continues "beyond Dec. 31, 2014, WPAHS still captures adequate volume to produce positive results and generate the cash flow necessary to meet its obligations while continuing to invest in capital improvements," the filing says.
The recovery will happen at a slower pace, however, because some patient traffic that would be directed toward WPAHS in the event of a Highmark-UPMC split would instead elect to visit UPMC physicians and hospitals.
In other words, if Highmark customers have a choice after Jan. 1, 2015, many would still choose UPMC.
The filing was in response to questions from UPMC, elected officials and, eventually, the state's deputy insurance commissioner. Stephen J. Johnson, at the end of February, asked Highmark for additional financial projections, saying the state couldn't properly vet Highmark's proposed takeover of WPAHS without learning more.
That request came after UPMC began circulating its own analysis of WPAHS customer flow, which predicted that West Penn Allegheny would see enough patients to survive only if Highmark ended its relationship with UPMC. That, in turn begged the question, why does Highmark still wish to enter a long-term agreement with UPMC?
In the new projections submitted to the state last week and made public this week, Highmark said WPAHS would have a net income of $113.8 million in 2015 even if UPMC is in-network and a $53.2 million profit in 2016 with UPMC in Highmark's network.
That profit will be partly driven, Highmark suggests, by the hiring of, and affiliation agreements with, new physicians in the region, which will send more traffic to West Penn Allegheny.
That will help build WPAHS's inpatient admissions from 57,000 in 2012 to 83,000 in fiscal year 2016-2017, the analysis predicts. The documents also contemplates the introduction of unspecified Highmark products, productivity improvements and cost savings through new drug and medical supply purchasing programs, and "other initiatives."
"The revised projections are based on Highmark and West Penn Allegheny Health System creating an integrated delivery network to reduce the trend in the increase in the cost of health care in Western Pennsylvania," said Highmark spokesman Aaron Billger.
Download the full document at http://pgne.ws/iPRND.
Bill Toland: email@example.com or 412-263-2625.