Highmark deal would make it health care pioneer
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Set aside, for one moment, Highmark's ongoing contract dispute with UPMC and assume the health insurer's plan to acquire the West Penn Allegheny Health System gets all the regulatory approvals.
What happens then?
Drowned out by all the heated charges and countercharges is the fact that Highmark is breaking new ground -- none of the other 38 Blue Cross Blue Shield independent licensed companies across the U.S. has ever purchased a health system before, and experts are hard-pressed to remember a major U.S. insurer buying an entire health system anywhere.
"They are merging two different cultures -- one whose sole purpose is to minimize costs and one whose sole purpose is to provide more medical services," said James McTiernan, principal and co-founder of the Downtown employee benefits firm Triad USA.
"Obviously, if you're a health care provider you make your margin by providing services, and if you're an insurer you're making your margin by making the cost and the amount of service as low as you can. And therein lies the conflict."
But local health care consultant Jan Jennings, who knows and has spoken to many of the top Highmark officers, said he is optimistic that Highmark can make this work, primarily because of the people they have at the top.
"They have put at the tip of the spear for hospital operations Mr. John Paul, who is the former chief financial officer for UPMC," Mr. Jennings said. "I can tell you that operationally, financially and strategically he is an absolute genius."
He is also heartened that Highmark's president and CEO, Kenneth Melani, is a physician who did a residency at West Penn Hospital. "He has repeatedly drilled into the senior management of Highmark that, 'Look, we're going into a new business. This [Mr. Paul] is a guy you're going to have to listen to.'
"John Paul is going to be calling the shots. And he's probably the best-qualified single person Ken Melani could have reached out to to do this thing."
First Published November 7, 2011 12:47 am
