Highmark Blue Cross and Blue Shield will eliminate several key terms from its $125 million loan to the two-hospital Western Pennsylvania Health System, which is buying Allegheny Health, Education and Research Foundation's four remaining hospitals.
To blunt brewing criticism that Highmark could use the original loan agreement to unduly influence the healthcare market in Pittsburgh, the insurer's board authorized management to eliminate several controversial provisions. (April 19, p. 4).
The board voted May 22 to strike the insurer's right to require that a consultant run the resulting six-hospital system if it fell into technical default.
It also rescinded the requirement that Highmark appoint the majority of a new board for the health system if it missed two consecutive loan payments.
And finally, the Highmark board removed the insurer's right to have a nonvoting observer present at the health system's board meetings.
Results of the Highmark board vote were made public last week.
"In our role, we offer financial support only," John Brouse, Highmark president and chief executive officer, said in a written statement. "In no way will our participation lead to Highmark Blue Cross (and) Blue Shield assuming control of the hospital system."
Meanwhile, Western Pennsylvania's planned acquisition of the AHERF hospitals won't meet the long-stated closing goal of May 31. Federal antitrust filings weren't made until May 11. Negotiations concerning financing for the deal continue.
The revised closing date has been pushed back to July, or possibly next month if details can be resolved more quickly, according to people familiar with the negotiations.
