Public hearing set for Washington Health System and UPMC merger set for Thursday
The public will have an opportunity Thursday to weigh in on the pending merger between Washington Health System and University of Pittsburgh Medical Center (UPMC).
The Pennsylvania attorney general’s office has scheduled a public hearing on the affiliation at 2 p.m. this Thursday at Washington & Jefferson College. The hearing will be held in the Rossin Campus Center Ballroom, 60 S. Lincoln St., Washington.
WHS President and CEO Brook Ward said the hearing will provide an opportunity for the public to hear certain details about the agreement and voice their support or concerns.
WHS and UPMC signed a definitive agreement on Oct. 18, after months of talks.
Under the terms of that agreement, UPMC will invest a minimum of $300 million in capital in WHS over the next decade and continue all key WHS services including women’s health, cardiac surgery, medicine, surgery and other lines of service for a minimum of 10 years.
UPMC also has agreed to maintain Washington Hospital as an inpatient acute care general hospital and core services such as emergency care, diagnostic, ambulatory, and primary care in Greene County for at least 10 years.
WHS, which has served the community since1897, has been operating under a budget deficit of $34.5 million for fiscal year 2024 and financial losses the last few years. The health system had been operating on thin margins prior to the COVID-19 pandemic, and the pandemic had a massive financial impact, Ward said.
“For the last decade or so, we were operating around 2% operating margin and feeling pretty good about it. But that has been steadily declining. And going into the pandemic, we were down to about break-even,” Ward said. “Then the pandemic hits. So now we have all the unexpected pandemic expenses, then you throw on inflation and increased workforce expenses, and it adds up quickly. In our industry of providing health care, you can’t just raise prices. So revenue is flat, expenses continue to rise due to workforce and inflationary issues pressures, which push the organization into financial losses.”
In 2022, WHS lost approximately $9 million. In the last fiscal year, 2023, the health system lost $22.5 million, and is on pace to lose $34.5 million this year. WHS is on track to have losses of exceeding $40 million next fiscal year with normal wage increases.
Additionally, WHS will lose an additional $14 million in annual revenue starting in 2025 since the Centers for Medicare and Medicaid Services’ Pennsylvania Rural Health Model – which Washington and WHS Greene hospitals participated in – is being discontinued.
Ward noted that the approximately $30 million in capital investments per year committed by UPMC far exceeds the capital budget allocations of $4 million in 2022, $6 million last year, and $8 million for 2024 that WHS has invested by itself.
“The good news is, we’ve run the business well, we don’t have a lot of debt, and we have money in the bank. But that isn’t going to last long,” said Ward. “So in the fall of 2022, the board of directors was challenged with a serious discussion about what the future of WHS looks like. We’ve been around for 127 years providing health care to the community, and we asked ourselves do we want to be around for another 127 years? And the answer is yes.”
“But in this environment, based on what the economics in health care are, we’re not going to be able to do it independently at this rate. And so at the end of the day, what becomes most important is keeping high quality health care local and keeping jobs. That’s what we focused on, and that’s what this deal with our longtime partner UPMC does,” he said.
After the board determined it was not feasible to remain independent, it submitted a request for proposals to affiliate with a larger health care provider and reviewed proposals from multiple bidders. Officials said UPMC clearly emerged as the best partner.
For the past several decades, WHS and UPMC have collaborated in several areas, including clinical partnerships with UPMC Hillman Cancer Center based at Washington Hospital; UPMC’s Heart and Vascular Institute; and UPMC Children’s Hospital of Pittsburgh Express Care clinic and other specialty clinics on the Washington Hospital campus.
With more than 2,700 employees, WHS is the largest employer in Washington County.
According to the merger agreement, there will be no job cuts within the health system, which includes Washington Hospital, WHS Greene and more than 40 off-site locations throughout three counties and includes diagnostic centers, outpatient care facilities, and the Wilfred R. Cameron Wellness Center, and hospice care.
“The deal, bottom line, keeps every major service line. In fact, UPMC is going to grow it. Every job stays, nobody’s pay gets cut, the benefits don’t get slashed,” said Ward.
Time is critical, Ward said, and if the deal is not approved, the health system could be looking at cutting services and employees in the near future to delay the inevitable.
“If this deal doesn’t go through now, we’re talking about a closure two or three years down the road, we’re talking about loss of 2,700 jobs, we’re talking about the loss of local health care, we’re talking about abandoning locations, we’re talking about the economic hit to Washington and Greene counties,” said Ward.
According to the Hospital and Health System Association of Pennsylvania WHS’s economic benefit to Pennsylvania’s economy in 2022 was $525,472,603.
UPMC operates 40 hospitals – including four regional hubs – and intends to make Washington Hospital a hub and to grow the campus bigger, according to the agreement.
Ward likened Washington Hospital to UPMC Passavant (Passavant Hospital merged with UPMC in 1997), noting, “When Passavant joined UPMC, it was about our size, and today, it’s double our size. So I think if they’re going to make us a hub, as is in the definitive agreement, that will come with more jobs and more growth.”
Ward said WHS employees and the community have expressed support regarding the merger.
SEIU Healthcare Pennsylvania has voiced concerns about the deal.
On its website, the health system said any opposition is coming from “outside groups” whose interest is in opposing UPMC, not WHS.
Said Ward, “For the community, this is a win. (WHS) continues and we get all the health care services – and probably more – than we’ve ever had, and everybody keeps their job, pay and benefits. What we’ve done in the deal is we’ve protected jobs, we’ve protected local health care, and I think we’ve got a plan to make it better long-term for everyone.”