“While the West Penn Allegheny Health System (WPAHS) is a vital element of the local health care system, Highmark does not have a deal to acquire WPAHS at this time,” the statement said.
But Highmark CEO Dr. Kenneth Melani, in comments widely reported by local media, further fueled speculation this month as he fielded questions about talks with West Penn Allegheny and the insurer's public dispute with the University of Pittsburgh Medical Center during a local business meeting.
“There is a potential for anything,” Melani said of a deal to acquire West Penn Allegheny, the Pittsburgh Tribune-Review reported. Highmark's interest in West Penn Allegheny may grow more substantial should the insurer's strained talks with UPMC fail to improve, Melani said, according to the Pittsburgh Post-Gazette. That could lead the insurer to be open to an acquisition, he told the newspaper. “We'll have to find another partner,” he said, according to the Post-Gazette report.
Should West Penn Allegheny fail, Highmark risks losing leverage with UMPC, a regional healthcare heavyweight with its own health plan.
As of June 30, 2012, a 10-year contract between Highmark and UMPC will expire. Discussions to extend the contract continue, Highmark said in its statement. But the health system's spokesman rejected the idea.
Paul Wood, UPMC spokesman, declined to comment on direct talks between the fractious partners but said news reports of Highmark's plans to compete with UPMC ended any chance for another contract.
Discord is nothing new in Pittsburgh's quarrelsome healthcare market. Highmark, with 4.8 million enrollees, and 20-hospital UPMC persuaded a federal judge this year to suspend an antitrust lawsuit brought by five-hospital West Penn Allegheny pending an appeal for the U.S. Supreme Court to intervene.
The lawsuit claimed Highmark raised pay to UPMC but held down pay for West Penn Allegheny while UPMC pledged not to sell its health plan or reach reasonable terms with Highmark competitors. UPMC dismissed the allegations as an attempt to shift blame for West Penn Allegheny's financial distress to UPMC.
West Penn Allegheny has struggled during a turnaround that has downsized and consolidated its Pittsburgh hospital operations. One major credit rating agency in February downgraded the system's already speculative credit rating, and West Penn Allegheny lost $26.8 million on operations during the first six months of its 2011 fiscal year. That follows an operating loss the prior year of $89.9 million, including a restructuring write-down of $70 million.