In an eleventh-hour push to win approval for its purchase of West Penn Allegheny Health System, Highmark Inc. started an advertising campaign warning consumers that they “could be paying a lot more for health care” if the deal does not go through.
Implicit in the television ads, which first aired in Western Pennsylvania on Friday, is that nearly bankrupt West Penn Allegheny won’t survive without Highmark. And if that happens, the region’s largest hospital network, UPMC, will be free to charge whatever it wants for medical services.
“Would you pay $10 for a gallon of milk?” the woman voicing the TV spot asks. “You would if there was only one grocery store.”
UPMC spokesman Paul Wood called the ad “comical and hypocritical,” adding that Highmark’s monopoly over the health insurance market is bigger than UPMC’s dominance of the hospital market.
“I think part of what they’re doing is Highmark wants to distract attention away from its role as the monopoly insurer and all the unnecessary costs they’ve imposed unchecked on their policy holders,” Wood said.
Highmark spokesman Aaron Billger said the ads “are about preserving consumer choice and preserving access to quality health care facilities.”
They direct consumers to a website, saveourhealthcarechoice.com, where they can send a message to the state Insurance Department in support of the hospital purchase before a public comment period ends on Friday.
The department has been reviewing Highmark’s proposed $1.1 billion acquisition of five-hospital West Penn Allegheny since November 2011. On Monday, the department released reports from two independent consultants on the deal, one of the final steps before it issues a decision.
The consultants said there were significant risks and uncertainties with Highmark’s plan to turn around the hospital system’s finances. But if successful, a revitalized West Penn Allegheny would be beneficial for health care consumers in Western Pennsylvania, they said.
Highmark, which asked the department to make a decision by the end of the month, is not trying to pressure state regulators into approving the deal, Billger said.
“The ads are focused on harnessing the community’s energies around the affiliation of West Penn Allegheny Health System,” Billger said.
The department has not said when it will decide.
If the deal is not approved by the end of the month, it could fall apart, leaving West Penn Allegheny and its 12,000 employees at the mercy of bondholders, who are owed about $710 million.
Under the deal, Highmark would buy out the bondholders at a discount of 87.5 cents on the dollar, or about $620 million.
That’s in addition to $475 million Highmark has committed to the system, which the insurer plans to make the core of a new integrated health care system that would compete with UPMC.
Highmark’s advertising campaign includes radio, print and online components in addition to the TV spots.
Billger could not say how much the state’s largest health insurer is spending on the campaign.
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April 14th, 2013