The dust is settling as the consent decree between Highmark and UPMC runs its course. The divorce is more or less finalized and Dad has officially moved out though he gets to keep the key to the back door for another six months in case he left anything behind. By the end of June though, even visitation privileges are off the table. Finally, after so many years of fighting, there is finality…or so it seems. Loose ends remain and as in many such bitter divorces, it’s the Children’s that sometime get forgotten…UPMC Children’s Hospital of Pittsburgh to be precise.

Under the current terms of the contract between UPMC and Highmark, Children’s Hospital remains in network with Highmark until the end of 2022. Highmark has expressed confidence that an accommodation will be reached to extend “in network” status beyond the current termination date. It’s possible, but banking on the hope that your recently divorced business rival will play nice is probably not the soundest future planning strategy.

A little bit of background here may be useful.

Children’s Hospital moved from its old Oakland location (completed at the end of the 19th century) to a brand-new state of the art facility in Lawrenceville (the site of the former St. Francis Hospital) on May 2, 2009. The new Children’s Hospital of Pittsburgh is considered one of the ten best Children’s Specialty Hospitals in the United States and also co-locates with such services as the Ronald McDonald House, which provides low or no cost accommodations for families of children who are ill.

The rebuilding of Children’s Hospital was financed by significant capital contributions from UPMC, Highmark, the Children’s Hospital of Pittsburgh Foundation and others. The price tag at the time was believed to be approximately $625 million, one of the most expensive construction projects in the city, exceeding even the price tag for the then new stadiums on Pittsburgh’s north side. Part of the agreement between Highmark and UPMC at the time was that in return for the money provided by Highmark in the form of grants and loans, UPMC would agree to provide a long term contract for Highmark’s insurance products. While the relationship between Highmark and UPMC was far from perfect at the time, it was nothing like the smash the fine china arguments to be had in ensuing years. That pre-nuptial agreement signed in slightly happier times is what expires at the end of 2022.

In the meantime, UPMC through Children’s hospital has a dominant position in serving the needs of the area’s youngest patients. An estimated 80% of all pediatricians and pediatric services in Western Pennsylvania are employed or affiliated with Children’s and it remains the only specialty Children’s Hospital in the region. It is also important to note that Children’s is more than the hospital in Lawrenceville. Children’s has many satellite clinics located across the region, in some cases co-located in or next to other non-UPMC hospitals.

So, what happens in 2022? It sounds far away, but it takes years of lead time and lots of money to course correct major enterprises such as delivering healthcare or building new hospital facilities.

There are a few directions that this could go:

1. UPMC could decide that Children’s should remain in network regardless of insurer. This could take two forms.

Want to read the entire article? Click Here