June 28, 2014 12:00 AM

Highmark, UPMC feud ends as governor brokers deal, and other briefs

Modern Healthcare

A governor-brokered deal has ended the long, ugly fight in Pittsburgh over whether members of Highmark health plans can keep getting in-network care at facilities operated by rival UPMC. Pennsylvania's Department of Insurance required Highmark to detail a transition for UPMC patients as a condition of its April 2013 acquisition of West Penn Allegheny Health System. Under a deal announced by Gov. Tom Corbett, Highmark members will continue to have some in-network access to UPMC providers—including oncologists and specialists in behavioral health and pediatrics—after the contract expires Jan. 1.

Phoenix-based Banner Health and the University of Arizona Health Network in Tucson signed a nearly $1 billion agreement for Banner to acquire UAHN and its subsidiaries. That would include the University of Arizona Medical Center, UAHN's faculty practice, University Physicians Healthcare, and the system's three health plans. Initial terms call for Banner to spend at least $500 million on capital projects in the next five years and pay $300 million to establish an academic endowment. UAHN's long-term debt, totaling about $146 million, would also be paid off, and the University of Arizona and its medical school would become Banner's exclusive academic partner.

Catholic Health Initiatives' acquisition streak proved effective for the diversifying system during the first nine months of its fiscal year. The Englewood, Colo.-based system's growth—which executives say is critical to capitalize on contracts that link payment to quality and health improvement—contributed to a spike in revenue and a healthy increase in operating margin during the nine-month period that ended March 31, compared with the same period a year ago. Operating revenue increased 32.5% to $10.2 billion, yielding a margin of 0.8% after accounting for restructuring, impairments and other losses. Without its recent deals, CHI would have posted an operating loss of $136.4 million and a negative margin of 1.8%.

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