UPMC merger plan would improve its reach north of Pittsburgh

Pittsburgh-based UPMC and Jameson Health System, New Castle, Pa., have signed a letter of intent to merge, a move that would beef up UPMC's provider dominance north of the city.

UPMC would invest $70 million in Jameson, a struggling 218-bed, two-campus hospital system about 75 miles north of downtown Pittsburgh. At least $15 million would be spent in the next two years.

“Small systems like Jameson are understandably trying to figure out where they fit into that landscape,” said Rex Burgdorfer, a vice president at Juniper Advisory, an investment banking firm that advises providers on merger and acquisition transactions.

UPMC already has a presence in the region. UPMC Horizon, a 159-bed hospital, has campuses in nearby Greenville and Farrell, Pa. UPMC officials said the merger would allow the system to cut costs and better coordinate care in the region, common refrains heard in the healthcare industry's consolidation wave. Jameson ultimately chose UPMC as its partner because of its proximity and strong financial background.

Jameson, which has 1,300 employees and about $128 million in revenue, has seen its red ink grow in the past two years.

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