Healthcare Business News

U.S. Justice Department OKs Highmark, West Penn affiliation

By Joe Carlson
Posted: April 10, 2012 - 1:30 pm ET

Federal officials have closed their antitrust investigation of an unusual acquisition of a distressed Pittsburgh health system by a regional Blue Cross affiliate, concluding that the cross-industry transaction seemed likely to increase competition in the local healthcare market.

A news release said the Justice Department had been investigating the possible market effects of Highmark's proposed acquisition of West Penn Allegheny Health System. Both Highmark and West Penn are based in Pittsburgh.

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The department said the "vertical" deal would bring a "significant infusion of capital" from the region's dominant health insurer to the ailing health system while not eliminating competition in business lines like hospital or physician services. Highmark reported losses of $32 million in the final quarter of 2011.

The deal is still under review by the Pennsylvania Insurance Department, and a hearing is scheduled for April 17.

Highmark has been roiled by internal change recently, following the April 1 dismissal of president and CEO Dr. Kenneth Melani relating to a domestic assault situation.

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