Tag: Pennsylvania

Recon takes an analytical look behind select developments in healthcare

The ongoing physician affiliation land grab in Pennsylvania’s Capital District

Closed vs. open Hospitals can compete for patient referrals either by exclusively affiliating with a subset of physicians (“closed model”) or by collaborating with as many qualified physicians as possible irrespective of competing affiliations (“open model”). (Both of these strategies are from the perspective of the facility, of course. A population health strategy would still focus on affiliating with physicians to aggregate patients, but with a goal of minimizing (not just directing) facilities based care.) The two strategies are generally incompatible. If most hospitals use the same approach in a

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

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

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