Affiliation agreement between West Penn Allegheny and Highmark approved by DOJ

The DOJ has closed its investigation into Highmark’s affiliation agreement with West Penn Allegheny Health System (WPAHS) after determining that the agreement would be pro-competitive. WPAHS is the second-largest hospital network in the Pittsburgh area (second to the University of Pittsburgh Medical Center (UPMC)) and Highmark has a market share that exceeds 60 percent. However, the DOJ found that competition in the markets for hospital, physician and insurance services would be enhanced “by providing WPAHS with a significant infusion of capital and increases the incentives of market participants to compete vigorously.” Moreover, Highmark’s $475 million financial commitment to WPAHS will allow the hospital to compete more effectively with UPMC.

The affiliation agreement is a vertical arrangement between Highmark, an insurer, and WPAHS, a hospital network. The agreement calls for a new nonprofit parent company that will hold all the corporate membership rights in Highmark and WPAHS. Upon investigation, the DOJ concluded that horizontal competition between the parties will not be affected by the agreement.

Full content: DOJ Press Release

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