In yet another hospital deal with a state attorney general's imprint on it, UPMC Health System has hurdled the antitrust lawsuit that threatened its controversial merger with Children's Hospital of Pittsburgh.
Health insurance superpower Highmark Blue Cross and Blue Shield agreed to drop its legal action against 16-hospital UPMC earlier this month just hours after state Attorney General Mike Fisher engineered a consent decree that allows the merger to go forward-but with several catches. The decree draws up a blueprint by which health plans can negotiate contracts with UPMC hospitals, giving Fisher an unprecedented role in the dealings between hospitals and insurers.
"This isn't just a `We hope that there's good-faith negotiations,"' said Fisher's spokesman, Sean Connolly. "This consent decree has teeth."
Fisher's involvement also highlights the increasingly active position that state attorneys general throughout the country are taking in hospital mergers and acquisitions (See related story, p. 18).
"I guess UPMC is getting to enough of a critical size to raise concerns about restraint of trade," said Gerald Katz, president of Plymouth Meeting, Pa.-based Katz Consulting Group.
Under the terms of the decree, UPMC has agreed to go to binding arbitration if negotiations with health plans fail. The system promised it would not limit access to 235-bed Children's to health plans that have contracts with other UPMC hospitals. It also agreed not to favor its own UPMC Health Plan with better rates.
Finally, UPMC promised that before it sells or acquires any hospitals in the seven-county region around Pittsburgh, it would give the attorney general 90 days' written notice. UPMC officials said they were eager to involve Fisher and that they initiated the idea of a consent decree.
"There was so much unfounded concern that we were not going to guarantee access to all children," said Jane Duffield, a spokeswoman for UPMC.
Highmark filed the lawsuit last June over fears that the merger would give UPMC a lock on pediatric services, which in turn would give the megasystem considerable leverage in contract negotiations with payers (June 25, p. 18). The warring parties were due in court last week where a U.S. District judge was to consider Highmark's request for a temporary restraining order to block the deal. Instead, the consent decree was filed in Allegheny County Orphan's Court on Oct. 24 with the merger on track to close one week later, on Oct. 31.
Michael Weinstein, a Highmark spokesman, could not say whether it was specifically the consent decree or a new 20-year contract signed with Children's during the same week that turned the tide in the legal dispute.
"Everybody had reason to move forward," Weinstein said. "We had a strong lawsuit, and we could have presented that in court, but on the other hand we were also hearing from the community loud and clear that they would like to see a settlement of this matter."