UPMC's long and sometimes controversial road to Harrisburg
March 20--And to be sure, government regulators have sometimes agreed. When New Castle's Jameson Health System announced its planned merger with UPMC in 2015, then-Attorney General Kathleen Kane actually provided Jameson officials with a list of health systems she hoped they would consider for the deal instead.
Jameson would ultimately side with UPMC, citing UPMC's coverage of its pension and debt obligations as key factors in their decision.
And while UPMC declined multiple requests for comment for this article, saying "PinnacleHealth and UPMC are now in the due diligence and regulatory review process, so we really cannot comment any further during this period," it has previously touted such mergers as a means of modernizing health care services, preserving local access, bringing doctors in to traditionally underserved markets and lowering costs by increasing buying power. That is the appeal of mergers with deep-pocketed systems in a nutshell, experts say.
"On the one hand there is the potential loss of competition, because if you had two options before, they now become one," Aviv Nevo, a professor with the University of Pennsylvania's Department of Economics, said about some mergers.
"But on the other hand there are various claims of higher quality and higher efficiency that merger parties can bring, and you could also have lower prices just because you have some cost reductions because they can eliminate some duplication," he said.
Nevo also said there are numerous health care and hospital mergers taking place in the U.S. each year, with many going unchallenged and others getting challenged but ultimately being allowed to proceed.
PinnacleHealth makes stunning move with UPMC, but watch for rivals to push back hard
But critics remain unconvinced of the longer-term impacts on consumers with fewer options, saying a more centralized network of providers can ultimately remove incentives for competitive pricing, as more patients are left with fewer places to turn.
In a December 2010 House Judiciary Subcommittee hearing on the state of antitrust enforcement in the health care industry, Sharis Pozen, then the U.S. Department of Justice Antitrust Division's chief of staff, said: "The success of [health care reform] will depend as much upon healthy competitive markets free from undue concentration and anti-competitive behavior as it will upon regulatory change," adding that her division would "carefully scrutinize and continue to challenge exclusionary practices by dominant firms -- whether for profit or nonprofit -- that substantially increase the cost of entry or expansion."
That zeal has in some cases trickled down to state's attorneys as well, but it remains to be seen if antitrust enforcement remains a top priority at the federal level going forward. Supporters of the Obamacare repeal have also cited a reduction in competition among insurers in explaining their opposition to the law, but it's not yet clear what, if anything, the final iteration of the GOP's replacement proposal will do to address that beyond existing antitrust laws.
Meanwhile, a joint press release issued by UPMC and PinnacleHealth this week stressed the mutual benefits of their planned arrangement, with UPMC President and CEO Jeffrey A. Romoff citing UPMC's "long history of successful affiliations" in places like Altoona and Erie, "where UPMC affiliations have meant significant investment and growth in advanced specialty care, primary care and community services for local residents."
Romoff also referenced a shared vision with PinnacleHealth of expanding "evidence-based, world-class healthcare with value-driven, low-cost insurance products to benefit more residents and businesses throughout Pennsylvania," adding, "This is at the heart of what we do."
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