Highmark Archives - Recon Strategy

Profit engine swap-outs: How UPMC sustained itself after the Highmark decoupling

Jacob Wiesenthal and Tory Wolff November 2, 2021

UPMC’s decoupling from Highmark exposed a critical vulnerability: economic dependence on its Allegheny County hospitals. In FY11-12,[1] these hospitals provided 70% of UPMC’s overall operating margin, an average of ~$270M annually.[2] A few years later, these operating margins had been cut in half and, by FY19, these same hospitals could contribute just $9M to the enterprise.[3] How did this happen? The Highmark dispute created severe economic headwinds for its western Pennsylvania (what we call “Core”)[4] hospitals: Decay in payer mix. As Highmark patients went elsewhere, the overall commercial share of

Bring it on: Highmark brings in a long-distance ally to help compete vs. UPMC in cancer care

Tory Wolff March 16, 2014

Summary Allegheny Health Network (AHN), the major delivery system in Pittsburgh owned by Highmark, and Johns Hopkins Medicine have signed a MOU to create an affiliation between Allegheny and the Johns Hopkins Kimmel Cancer Center. Over many years, UPMC has established a very large network of cancer care throughout western Pennsylvania; AHN has responded in kind albeit much less broadly. At this point, there is very little independent cancer care left in the region. By partnering with a prominent UPMC competitor in oncology, the deal is likely designed to shore

Getting the troubled Highmark-West Penn relationship back on track: an outside-in speculation

Tory Wolff December 1, 2012

Summary Highmark and the West Penn Allegheny Health System (WPAHS) are not aligned on their vertical strategy to counter UPMC in the Pittsburgh market WPAHS can only absorb a portion of Highmark’s care demand now being met by UPMC. So its upside on the success of Highmark’s vertical strategy is capped Highmark would prefer a deal with UPMC if it get reasonable rates: the status quo looks better than the uncertainties of a vertical model build A large share of UPMC’s business still comes from Highmark which makes UPMC vulnerable.

Transitioning from patchwork to quilt: NY and PA’s path to integrating HIEs at the state level

James Matheson June 26, 2012

Last month, NY and PA announced plans for how they will integrate data sharing across local HIEs. The state planning efforts share some key parameters: Roughly equal funding with about $20 million in federal grants Initially targeting the integration of data for about 13 million people (in PA’s case the entire state, in NY’s case the NYC metro area) Using a “thin” umbrella model to knit the various existing local HIEs together into a decentralized model Want community involvement of local doctors, community workers, and payers Beyond those parameters, however, the plans look quite different. NY’s approach: Start

Lumeris, NaviNet and the emerging battle for cloud-based ACO enablement

Tory Wolff February 16, 2012

Summary Administrative clearinghouse NaviNet has been acquired by 3 Blues plans and a provider of analytics capabilities for plans and providers (Lumeris). Both NaviNet and Lumeris appear to need a strategic breakout. The key opportunity is coupling sophisticated cloud-based (=EMR agnostic) analytics with a real time communications platform touching 130K physician offices. If viable, cloud approaches to ACO enablement could reduce the upfront infrastructure cost for providers to go at-risk, therefore allowing smaller scale provider groups to participate in the new economics – an attractive proposition for payers unnerved by

Upping in ante in Pittsburgh: the health information exchange arms race

Tory Wolff September 8, 2011

A few weeks ago, UPMC announced an agreement among nine area systems to spend $4M over the next two years to launch a health information exchange called ClinicalConnect. Reportedly, Highmark (and presumably the West Penn Allegheny hospital system it is in the process of purchasing) requested to be a part of the initiative but was refused. Building electronic connections across hospitals – particularly between community systems (such as the non-UPMC participants in ClinicalConnect) and tertiary centers such as the UPMC facilities – helps make transitioning patients easier by making full

Highmark and West Penn: it’s about mitigating consolidation, not transforming the system

Tory Wolff June 30, 2011

Highmark will invest up to $475M in the West Penn Allegheny Health System, a move characterized as a prelude to purchase. This is no bold move to drive closer integration of information flows and care decisions or align incentives in a transformative vertically integrated model. My take: this is about desperately propping up the last competing provider standing in a highly concentrated hospital market. Highmark’s hand was forced by West Penn’s financial bleed out. But, in response, UPMC has thrown down the gauntlet in a move that will reshape the

Tag: Highmark

Recon takes an analytical look behind select developments in healthcare

Profit engine swap-outs: How UPMC sustained itself after the Highmark decoupling

Bring it on: Highmark brings in a long-distance ally to help compete vs. UPMC in cancer care

Getting the troubled Highmark-West Penn relationship back on track: an outside-in speculation

Transitioning from patchwork to quilt: NY and PA’s path to integrating HIEs at the state level

Lumeris, NaviNet and the emerging battle for cloud-based ACO enablement

Upping in ante in Pittsburgh: the health information exchange arms race

Highmark and West Penn: it’s about mitigating consolidation, not transforming the system

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