Jefferson Regional announces 'strategic partnership' with Highmark

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Highmark Inc. will contribute as much as $75 million to Jefferson Regional Medical Center as part of a new "strategic partnership" announced today.

Highmark will also guarantee some of Jefferson's long-term obligations, such as debts and pensions, and will commit to expansions to the hospital's emergency room and to the ambulatory surgery suite at Bethel Park.

And Highmark will take over 75 percent of the seats on the Jefferson Regional board of directors.

A major health system in the South Hills, Jefferson, in turn, will sign on to all Highmark insurance products, sources said.

The $75 million Highmark contribution would likely come through the Jefferson Regional Medical Center Foundation.

At the Jefferson campus, there are plans for a new state-of-the-art emergency department.

Systemwide, the partnership plans to expand clinical services such as neurosurgery and gynecology.

At a press conference this afternoon, Jefferson Regional president and chief executive officer John J. Dempster said the health system would become "the southern hub of the Highmark provider network."

"We share a common vision to meet the southern region of western Pennsylvania," he said. ".... In order to remain strong, we needed a long term, trusting partner."

He said the Jefferson board voted unanimously in favor of the affiliation Monday.

Robert Baum, Highmark board chair and interim CEO, called the talks with Jefferson Regional a "refreshing negotiating experience" -- in contrast with the negotiations with UPMC hospital system.

He noted that Highmak's cash "is not a rescue" but part of a growth strategy for both organizations.

Mr. Baum also said WPAHS and Jefferson Regional would essentially be "sister" entities on the new Highmark organizational chart.

This morning, leaders from both organizations discussed the arrangement with physicians by phone and there have been two meetings with Jefferson Regional employees outlining the new agreement.

Besides the 373-bed main campus facility in Jefferson Hills, the medical center has outpatient centers in Baldwin, Bethel Park, Belle Vernon, Brentwood, Charleroi, Clairton, Homestead, Pleasant Hills, Squirrel Hill, and Uniontown.

This past fiscal year, from July 2010 through June 2011, Jefferson saw more than 17,000 admissions, making it the fifth-largest hospital in Allegheny County in terms of patient traffic and the largest outside of UPMC and the West Penn Allegheny Health System, which is in the process of being acquired by Highmark.

A year ago, Highmark officials announced plans to acquire financially ailing West Penn Allegheny Health System, which would be the flagship for Highmark's plans for a regional healthcare delivery system. That deal is still under review by the state insurance department.

Jefferson Regional reported $271.3 million in revenue for fiscal 2011, a $20 million increase over the previous year.

In a March interview, chief financial officer JoAnne Hahey attributed the improvement to increased patient volume as a result of the medical center's purchase of key physician practices and its community outreach.

In the past two years, she said, Jefferson has established about 20 imaging centers, labs, X-ray and CT stations, as well as physical and occupational therapy centers throughout the South Hills.

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Steve Twedt: stwedt@post-gazette.com or 412-263-1963. Bill Toland: btoland@post-gazette.com or 412-263-2625. First Published June 12, 2012 10:00 AM


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