Highmark and West Penn Allegheny Health System Announce Plans to Pursue Affiliation

PITTSBURGH, June 28, 2011 /PRNewswire/ -- Highmark Inc. and the West Penn Allegheny Health System (WPAHS) today announced their intentions to pursue an affiliation aimed at maintaining the health system as a high-quality choice for health care services to millions of Western Pennsylvanians.

As part of the initial arrangement, Highmark is immediately providing a $50 million grant to the WPAHS, enabling the health system to sustain and strengthen its West Penn and Forbes Regional hospitals while assuring the continued delivery of quality medical services by the entire system. Highmark is making a total financial commitment of up to $475 million over four years, including $75 million to fund scholarships for students attending medical schools affiliated with WPAHS, and to support other health professional education programs.  

The management and boards of directors of Highmark and WPAHS will continue discussions in the weeks ahead with the goal of finalizing a definitive agreement.  

"Today is an important first step to ensuring the continued viability of the West Penn Allegheny Health System and a choice of health care services in our region," said Kenneth R. Melani, M.D., Highmark's president and chief executive officer.

"For generations, the residents of our community and physicians have had broad choices in the health care marketplace," Dr. Melani said. "For consumers, we want to preserve their choices. For physicians and other health care providers, we want to ensure multiple patient referral options. This affiliation will help preserve those very options. In addition, the $75 million that we will be contributing for scholarships for medical school students and other educational programs will go a long way in addressing the shortage of physicians in the region, and help us retain highly trained doctors to serve our community."

"West Penn Allegheny has been recognized nationally for its leading doctors and nurses who provide high-quality, personalized care; however, there is no doubt that we have lacked the capital necessary to deliver on our full potential," said David L. McClenahan, West Penn Allegheny's chairman of the board. "We share a common goal with Highmark to focus on the patient experience, improve health care and ensure choice for both those seeking care and those seeking employment in the health care sector in our region. We look forward to finalizing our affiliation agreement in the weeks ahead."  

McClenahan also announced a transition in the West Penn Allegheny leadership, stating, "Dr. Christopher Olivia will be leaving his role as President and CEO on June 28, 2011. He will be consulting with Highmark and assisting Dr. Melani in connection with the conclusion of this transaction and other strategic issues."  

"Dr. Chris Olivia has been a valuable change agent for West Penn Allegheny. Since he arrived in 2008, Chris has been steadfast in his belief about a bright future for the System. He has led the organization through some difficult changes while laying groundwork for exciting developments such as the medical school partnership with Temple University School of Medicine," said McClenahan.  "The board and the entire West Penn Allegheny Health System are grateful for Chris' vision and leadership that has brought us to this remarkable announcement."  He also announced that Dianne Dismukes has been named President and CEO of WPAHS.

The proposed affiliation of Highmark and the West Penn Allegheny Health System is the first step in a broader Highmark effort to develop alternative health care options that offer high-quality care at a lower price and more coordinated and patient-driven delivery of medical care.

"It is critical to the economic and financial health of the community that Western Pennsylvanians have a choice of health care providers and that we preserve strong and valuable community institutions like the West Penn Allegheny Health System," Dr. Melani said.

About Highmark Inc.

Highmark Inc., based in Pittsburgh, is an independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield plans. Highmark serves 4.8 million members in Pennsylvania and West Virginia through the company's health care benefits business and is one of the largest Blue plans in the nation. Highmark has 19,500 employees across the country. For more than 70 years, Highmark's commitment to the community has consistently been among the company's highest priorities as it strives to positively impact the communities where we do business. For more information, visit www.highmark.com.

Highmark Inc. is an independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans. For more information, visit www.highmark.com.

About West Penn Allegheny Health System

West Penn Allegheny Health System (WPAHS) is a physician-led healthcare organization based in Pittsburgh, Pa.  Recognized as a healthcare quality and personalized service leader in its market, the organization's sole purpose is to improve the health of people in the Western Pennsylvania region.  West Penn Allegheny Health System's specialty programs continually receive national and international recognition -- particularly in the areas of Bone and Joint, Cardiovascular, Neurosciences and Oncology, which make up the organization's four Institutes of Excellence.  The System offers 46 graduate medical programs, two nursing schools, and will host the first undergraduate medical school class of the Temple University School of Medicine at West Penn Allegheny Health System in 2013. WPAHS is also home to the Allegheny-Singer Research Institute, which sponsors interdisciplinary programs to understand, treat and prevent human diseases.  The System is comprised of five hospitals, including Allegheny General Hospital on the North Side, West Penn Hospital in Bloomfield, Allegheny Valley Hospital in Natrona Heights, Canonsburg General Hospital in Canonsburg, and Forbes Regional Hospital in Monroeville.

SOURCE Highmark Inc.