It's hard to imagine why anyone would need a consultant to determine if Highmark's plan to merge with West Penn Allegheny Health System is good or bad.
But the Pennsylvania Insurance Department sought the advice of two -- and both consultants in reports released last Monday said the proposal would mean better delivery of health care, lower increases in medical costs and enhanced competition between hospitals. We'll add two more benefits: greater consumer choice and preservation of thousands of jobs. WPAHS, after all, accounts for six hospitals and 11,400 employees.
For that reason, there is no need for the state to delay in approving the merger, which is essential to maintaining effective and accessible quality health care in the Pittsburgh region.
As the reports by Blackstone Advisory Partners of New York and Compass Lexecon of Chicago make clear, however, all these pluses are not a slam-dunk. To achieve them will require smart corporate decisions by Highmark, Western Pennsylvania's largest health insurer, and a sizable financial commitment. Even so, Blackstone pronounced Highmark "well capitalized" for the transaction, "which is unlikely to jeopardize Highmark's financial stability."
A large factor in the merged entity moving forward is the fate of Highmark's contract with UPMC, the dominant health care provider in this half of the state. If Highmark insurance customers have no access or very expensive access to UPMC physicians and facilities, WPAHS could find itself with more patients and a quicker path to recovery. But, if Highmark were somehow able to get UPMC to renew its contract allowing Highmark customers to keep their more affordable, in-network access to UPMC care after 2014, then WPAHS will have to compete more vigorously for their business.
We say renew the Highmark-UPMC contract and keep choice and competition alive.
The first step in that direction, though, must be the Insurance Department's approval of the Highmark-WPAHS merger.