PITTSBURGH—Insurer Highmark closed on a deal for its first hospital under a costly plan to diversify and compete with the region's well-financed and largest health system. Jefferson Regional Medical Center, in Jefferson Hills, Pa., will receive $100 million for capital projects under the deal, as well as cash for outstanding debt and pension costs, which Moody's Investors Service estimated to be $160 million. Jefferson Regional Medical Center's foundation will receive $75 million. Highmark in 2011 announced plans to expand into hospital operations with the proposed acquisition of West Penn Allegheny Health System—a deal that has struggled as the health system's financial distress intensified—and the insurer went on to reach an agreement with Jefferson Regional. Highmark also entered into talks with St. Vincent Health System of Erie, Pa. No definitive agreement has been reached with St. Vincent, according to a Highmark spokesman. “Our partnership with Jefferson Regional is a critical step in our efforts to build a new, integrated healthcare delivery system,” Dr. William Winkenwerder, president and CEO of Highmark, said in a news release. The most significant step, however, remains uncertain as Highmark's increasingly expensive bid for West Penn Allegheny undergoes review by the Pennsylvania Insurance Department, which last week demanded new financial projections for the struggling health system. The insurance agency said questions about those projections were raised by ongoing negotiations to include West Penn Allegheny's rival in Pittsburgh, the UPMC system, in Highmark's health plans beyond 2014.