Highmark Health is aggressively expanding into Central Pennsylvania, three years after health system and insurance rival UPMC snapped up seven community hospitals in the same region.
But here’s the difference: Highmark is using partnerships with other health care providers to enlarge its footprint while UPMC is relying on hospital acquisitions to build its brand. It’s too early to tell which approach works better, but Highmark’s partnerships are getting traction with the opening of a big outpatient center and construction of two hospitals while sales of its most popular insurance products get their footing in the central part of the state.
“We’re focused on partnering with providers across our network,” said Steve Seftchick, vice president of network partnerships at Highmark. “We’ve got some exciting products.”
UPMC Health Plan officials were not available for this story.
The Highmark-UPMC rivalry stretches back years, with Highmark members in Allegheny County essentially shut out of many UPMC hospitals as the result of a consent decree that was reached with the state attorney general in 2019. The battle for control of the Central Pennsylvania health care market has a different twist, with Highmark introducing its popular Community Blue health insurance plans in 2019 — sold as Choice Blue in nine Central Pennsylvania counties — as a tool in building its book of business.
Like the Community Blue plans, Choice Blue offers lower premiums — usually single percentage points lower when compared with comparable plans — and a limited network of doctors and hospitals. Highmark offers access to UPMC hospitals in Berks, Cumberland, Dauphin, Lancaster and York counties, but at a higher out-of-pocket cost to the member.
Locally, Highmark Community Blue coverage is not accepted at eight UPMC hospitals and 16 Hillman cancer treatment centers, essentially banning some 450,000 Highmark members from using UPMC facilities in Allegheny County.
The central expansion
Instead of buying hospitals, Highmark inked collaborative agreements with Geisinger Health System and Penn State Health in May and December of 2017, respectively, jointly committing with each system to more than $1 billion for new hospitals, doctors’ offices and outpatient treatment centers.
Highmark and Danville, Pa.-based Geisinger jointly agreed to spend $100 million to expand primary care and women’s health with construction of a 120,000-square-foot hospital in the Williamsport area of Lycoming County and a two-story clinic and urgent care center in Lock Haven, Clinton County.
Hershey, Pa.-based Penn State Health has also been busy, opening the 76,000-square-foot Lime Spring Outpatient Center in Lancaster County in 2019 followed by groundbreaking this year for the Penn State Health Hampden Medical Center, a 108-bed hospital in Cumberland County and the 129-bed Penn State Lancaster Medical Center in East Hempfield, Lancaster County.
Penn State Health’s Hampden Medical Center, which is scheduled to open next year, will be located about a mile from UPMC Pinnacle West Shore Hospital, where UPMC recently added 58 beds.
Moreover, Penn State University trustees recently approved Penn State Health’s acquisition of the Holy Spirit Health System from Geisinger, giving Penn State a 311-bed hospital in Camp Hill and outpatient and urgent care centers in Cumberland, Dauphin, Perry and York counties. Terms of the deal were not disclosed, but it’s expected to close in October.
Highmark’s role in Penn State Health’s expansion burst is unclear, but it began after three Highmark executives took seats on Penn State Health’s board in 2018 as part of the joint venture.
Consumers often use hospitals and doctors in their health insurance provider network, so brokers have been introducing Highmark’s Choice Blue plans to businesses and individuals in Central Pennsylvania since January — with some success, according to David Ritter, vice president of Glatfelter Insurance Agency in York, where WellSpan York Hospital, with nearly 600 beds, accepts Highmark Choice Blue with the lowest out-of-pocket contribution from members.
Highmark members pay more out of pocket to go to UPMC Memorial Hospital, a 98-bed facility that is the other hospital in York.
Still, UPMC Health Plan is the low-cost health insurer in the York region, Mr. Ritter said, even though Highmark’s Choice Blue plans are attracting price-conscious small employers whose employees prefer in-network access to the city’s biggest hospital.
Highmark is having a tougher row to hoe in Harrisburg, where the dominant hospital is UPMC Pinnacle, Mr. Ritter said. Highmark’s Choice Blue plans require a bigger out-of-pocket expense to use the UPMC hospital, which is a hurdle when UPMC Pinnacle Harrisburg is the city’s biggest hospital with 400 beds.
Still, Highmark Choice Blue is catching on, Mr. Ritter said.
“It’s getting some traction,” he said. “Price is king among smaller groups. It’s all about rates.”
Kris B. Mamula: kmamula@post-gazette.com or 412-263-1699.
First Published: July 24, 2020, 10:20 a.m.