UPMC, Highmark embroiled in classic bad splitup
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As with many couples headed for divorce -- supposing Highmark Inc. and the University of Pittsburgh Medical Center do eventually split -- the breakup will involve accusations and recriminations, self-justification and finger-pointing, all seeking to answer the questions:
What went wrong?
Who's to blame?
Can it be fixed?
Highmark and UPMC are the classic on-again, off-again couple:
• There were years of negotiations, lawsuits and mudslinging that preceded the reimbursement contract that was signed nine years ago, and is set to expire next year. At the time, many viewed the contract as a Highmark capitulation.
• There was the tug-of-war over Children's Hospital, which saw UPMC outbid Highmark's offer to keep the pediatric speciality center independent.
• UPMC launched its own insurance carrier in 1996, then went after its injured rival, West Penn Allegheny Health System, by snapping up properties and building a new hospital in Monroeville.
• Highmark potentially threatened the market's balance by virtue of its own creation, the 1996 merger of Pennsylvania Blue Shield and Blue Cross of Western Pennsylvania.
Some think the conflict arises from the personal animosity between the heads of the two organizations, UPMC's Jeffrey Romoff and Highmark's Ken Melani.
Or maybe it all boils down to a simple love triangle, with West Penn Allegheny now playing the role of home wrecker and UPMC the scorned partner.
As with most divorces, some wish they'd just patch things up; others think they should have split years ago.
But with Highmark formally laying out its planned $475 million acquisition and capitalization of the financially troubled West Penn Allegheny, and UPMC saying such a deal would preclude any future in-network contract between Highmark and UPMC, the chances of a split between the region's largest insurer and its largest health system seem better than ever.
That means millions of non-Medicare Highmark policyholders might not have full access to UPMC hospitals; conversely, UPMC hospitals and physicians won't have those Highmark policyholders as patients, and revenue drivers.
"The biggest difference right now, from 10 years ago: They were negotiating 10 years ago," said Vince G. Wolf, executive vice president at Cowden Associates, a Downtown business consulting firm. "It's a little more discouraging."
First Published July 3, 2011 12:00 am
