Hospital becomes UPMC Altoona

You could argue that Altoona Regional Health System’s acquisition by UPMC is like the little-known middle-class girl who wins the heart of the rich and famous magnate who will set her up for life.

Who better to say how the magnate got to be rich and famous than the people who helped made it happen?

Thomas P. Detre, Jeffrey A. Romoff and Arthur S. Levine – who played key roles in the creation of UPMC, a $10 billion international company that is ranked No. 10 in U.S. News & World Report’s 2012 hospital honor roll, helped write “The Relationship Between the University of Pittsburgh School of Medicine and the University of Pittsburgh Medical Center – A Profile in Synergy,” published in the journal Academic Medicine in 2008.

UPMC’s success grew out of a mutually beneficial partnership with the University of Pittsburgh’s School of Medicine, according to the article.

It had its roots in a “pilot” project in the 1970s, that began after the state of Pennsylvania threatened funding cuts to Western Pennsylvania Psychiatric Hospital – the only Pitt-controlled teaching hospital, alongside five others that were independent and loosely grouped.

The state was dissatisfied with the hospital’s “lack of responsiveness to new developments in psychiatry and to the mental health needs” of the region.

That led Pitt to obtain a $5 million grant from the Richard King Mellon Foundation, which it had been trying since 1947 to establish a first-rate health center in Pittsburgh.

Progress had been “painfully slow” toward that goal, as the Pitt medical school had remained a modest regional institution, while its affiliated teaching hospitals had remained “largely undistinguished,” according to the article.

With the grant, however, Pitt recruited Detre from a tenured position at Yale, according to a 2010 obituary in the Pittsburgh Post-Gazette.

His vision was so compelling that 30 colleagues followed him, according to the obit.

At WPIC, Detre – a native of Hungary who lost his parents and 20 other relatives in the Holocaust – stressed the application of emerging science, rigorous research and business principles.

He negotiated control of the hospital’s clinical revenues for reinvestment in the medical school.

It became a virtuous cycle, with clinical income promoting research in the medical school and research generating credibility that increased hospital income, according to the article.

In 1984, Detre’s success led Pitt to place him over the entire medical school, leading to creation of interdisciplinary centers of excellence for cancer and transplantation.

The following year, the board of Presbyterian Hospital, a member of the teaching hospital coalition, asked Detre’s management team to look at creating a stronger coalition, which led to a proposal for shared board governance between hospitals and the medical school, leading to the model that in 1990 became UPMC – an independent, non-profit corporation.

Romoff became UPMC president in 1992.

In 1997, Pitt became one of the nation’s top 10 National Institutes of Health grant recipients, largely because of its medical school faculty, and it has maintained that status.

Around the same time, the medical school cured a deficiency in basic science research, hiring Levine as senior vice chancellor, leading to creation of medical school departments for immunology, structural biology, computational biology and biomedical informatics.

Additional hospitals began joining the system, and in 2008 UPMC became a “fully integrated delivery and financing model in 2008, with four core operating units: hospital and community services – there are 20-plus hospitals in all now; insurance; physician services and international and commercial services.”

“UPMC’s core mission is to deliver scientific evidence-based outstanding clinical care [that’s where Pitt/UPMC relationship shines],” stated UPMC spokeswoman Susan Manko Friday in an email. “UPMC Altoona fits into that because our mission also is to extend the delivery of this care close to home out into extended communities beyond Pittsburgh.”

Altoona Regional is looking to the merger to ensure financial stability and enhance services, its officials have said.

Changes today

Last week, Manko and Altoona Regional spokesman Dave Cuzzolina said they didn’t foresee anything at the time that could derail the merger.

Still, the state Attorney General’s office has been reviewing the transaction for antitrust issues, spokesman Dennis Fisher said recently.

Asked for an update last week, Fisher had no additional comment.

He had previously said that announcements by the AG’s office of its plans to sue to stop hospital mergers it deemed illegal according to antitrust laws had led parties to abandon their merger plans.

There is no particular indication of that happening here.

Asked about the Attorney General’s role in reviewing or approving the transfer of charitable assets from Altoona Regional to UPMC, AG spokesman Joe Peters said, through Fisher: “we generally work to accommodate the desired timeline of the transaction parties. But we always reserve our right to resolve any issues that may be presented and will take whatever legal action may be required.”

According to Manko, no further AG approval is required, and there is no transfer of charitable assets involved.

There is also no need for approval of the acquisition in Blair County Orphans Court – unlike the approval granted recently in Erie County Orphans Court for Highmark’s acquisition of St. Vincent Health System, according to Nathan Karn, the Blair County solicitor and Manko.

Neither knows why there was a difference.

The Blair County Hospital Authority, however, in May, consented to UPMC’s assumption of Altoona Regional’s debt in connection with the merger, said Karn, who is also solicitor for the authority.

The authority was the issuer of that tax-free debt, he said.

The authority’s only interest in reviewing the merger is to ensure the liability for the debt wouldn’t shift back onto the authority, he said.

Otherwise, “we’re not going to stand in the way of other people’s decisions,” he said.

UPMC will be taking control of all Altoona Regional’s affiliated companies – but there are no immediate plans to rebrand them, because there is value in the current brands, Manko said.

UPMC will also be taking control of Altoona Regional’s real estate – including the former Bon Secours hospital property along and near Seventh Avenue, according to Manko.

There merger deal includes no “out” clause, executable if the affiliation doesn’t work, she said.

Nason Hospital had previously been thought to be a likely subsequent partner in the UPMC-Altoona partnership. But when asked last week if that’s still on, Manko wrote: “There are no current discussions about that.”

The merger parties have been working on plans and specifications for sign and logo changes, according to Cuzzolina.

“First phase will be cosmetic changes only,” he said. Large “high wall” letters and lighted letter changes will come later, he said.

Many of the myriad changes that will result from the merger will happen “gradually and many will be internal and go unnoticed by the public,” Cuzzolina said.