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In a public hearing held by the Pennsylvania Attorney General’s office on Thursday afternoon, regarding the proposed affiliation of Washington Health System, a 2,000-employee, two-hospital health care provider in Washington and Greene counties, and health care giant UPMC, community members, WHS employees and local leaders largely shared their words of support.
The open forum was held on Washington and Jefferson College’s campus.
Overall, there was a supportive sentiment regarding the affiliation or acquisition, with a large group of supporters of the acquisition present in matching shirts.
“Although I’m not necessarily happy that Washington Health System is going to lose its independence through this acquisition … the fact of the matter is, the system is in trouble, the system is hurting from a financial standpoint,” State Rep. Tim O’Neal, who was the first speaker at the hearing, said.
However, despite the overwhelming support at the hearing on Thursday, some employees and community members have previously expressed concerns that if WHS is acquired by UPMC, facilities will be shut down and services will be cut, as well as concerns that patients will be pushed out due to insurance incompatibilities.
Many of the employees at WHS are represented by the SEIU Healthcare Pennsylvania union, which has taken a stance against the affiliation since it was announced in June 2023, citing instances where UPMC has acquired hospitals from other health care systems and subsequently closed them. SEIU Healthcare Pennsylvania and UPMC have long clashed over employee unionization, with SEIU pushing for a federal antitrust investigation into the health care system over the past year.
A representative from United Food and Commercial Workers Local 1776, which represents over 600 workers in Washington County, was present and spoke in opposition of the affiliation.
”As a union that has seen its fair share of mergers and acquisitions in its industries, very rarely do we see success stories where members of our community make out better in the process,” Lance Huber, executive vice president of UFCW Local 1776, said.
The acquisition of WHS by UPMC is currently the subject of a regulatory review by the Federal Trade Commission, which conducts reviews of health care and other acquisitions to ensure that a monopoly isn’t created in the region that is served. If the FTC finds that the WHS and UPMC affiliation would violate antitrust regulations, it has the power to block the acquisition.
But according to WHS CEO Brook Ward, should the acquisition be blocked, options for Washington Health System, which has been dealing with hemorrhaging losses amidst economic conditions over the past several years, would be extremely limited.
“I’m not really sure what our options would be,” Ward said in an interview with the Business Times, pointing out that a potential affiliation with Highmark and Allegheny Health Network would also be off the table if the acquisition is blocked for antitrust reasons.
During the hearing, Ward explained that WHS specifically sought out a community-minded partner that shared its core values. Notably, WHS and UPMC have had a relationship since the mid 1990s, including several joint ventures.
Ward said that in fiscal year 2022, WHS faced a $9 million loss that grew to $22.5 million in 2023 and will reach $34 million in 2024. He said that WHS is on track to post a $40 million loss in 2025, which will be partially caused by the Centers for Medicare and Medicaid Services’ Pennsylvania Rural Health Model being discontinued. He attributed economic conditions, such as workforce expenses and post-pandemic inflation for much of the losses, but said that margins had been declining over the past decade.
He stressed that an acquisition would be the only way forward for the health system, which, in a “Separating Fact from Fiction” information sheet posted on its website, alluded to a possible shutdown, saying WHS would be “forced to spend the next two to three years cutting services and reducing costs before facing the inevitable.”
In order to further stress the current financial situation of WHS, Ward also explained that during Covid, in order to cut costs and save money, the system dropped its capital budget significantly, from $12 million to $4 million, and that it has not since recovered, with WHS unable to invest in new equipment in its hospitals.
“We’re telling people to run equipment until it breaks,” he said.
Many of the community members and WHS employees who spoke at the hearing echoed Ward’s concerns, expressing that without an affiliation agreement, WHS’ future is in greater jeopardy than it would be should it be acquired by UPMC.
“I wouldn’t downplay any of the union members’ concerns, but the fact of the matter is, if we want the health system to persist into the future, something has to be done,” said O’Neal, who represents House District 48, which includes part of Washington County.
Jeff Kotula, president of the Washington County Chamber of Commerce, stressed that there are “only two solutions” to WHS’ current state: either the affiliation goes through, or WHS continues to lessen its services and potentially close its hospitals.
The information sheet on WHS’ website and Ward himself also provided details on what is included in the Definitive Agreement signed by both WHS and UPMC back in October 2023. Per the agreement, UPMC will invest a minimum of $300 million into WHS, as well as $40 million to the Washington Hospital Foundation. UPMC has also agreed to continue WHS’ key services in women’s health, cardiac surgery, medicine and surgery for at least 10 years, and it will “maintain Washington Hospital as an inpatient acute care general hospital and core services such as emergency care, diagnostic, ambulatory, and primary care in Greene County” for at least 10 years as well.
Ward said that UPMC plans to make Washington Hospital one of its hub hospitals, similar to UPMC Hamot in Erie, which UPMC acquired in 2011. He said that the number of jobs and services offered will increase under the affiliation.
“Everyone who has a job is guaranteed a job at the current rate of pay or more,” Ward said.
WHS and Ward said that should the affiliation be approved, UPMC has agreed to honor the collective bargaining agreement that is in place between WHS and SEIU members that runs through February 2025.
WHS has also assured patients that if the deal goes through, access to health care will not be interrupted depending on what health insurance they possess.
“WHS currently has numerous clinical arrangements and joint ventures with UPMC, which have provided subscribers to all major and regional insurance plans with exceptional care,” WHS said on its website.
The hearing on Thursday, held by the state AG’s office as it decides a stance on the deal and whether or not to approve it should it not be blocked at the federal level left little about the potential acquisition untouched. But as federal regulators continue their review, it is unclear when or if the potential affiliation will be complete. WHS is stressing that time is of the essence.
“As each month goes by without the affiliation, the current WHS system is placed in further financial strain,” the system said on its website.