The Pennsylvania-based hospital operators will combine one year after announcing the move.
The University of Pittsburgh Medical Center (UPMC) has cleared regulatory hurdles to close its acquisition of two-hospital nonprofit Washington Health System.
One year after the operators announced plans to merge, the completion of the deal now allows UPMC to invest at least $300 million over 10 years to improve clinical services and upgrade facilities at the two hospitals, renamed to UPMC Washington and UPMC Greene.
“UPMC has a long, successful track record of affiliations with like-minded organizations,” Leslie C. Davis, president and CEO of UPMC, said in a statement. “We know how essential these hospitals are to this region to preserve needed health care services and livelihoods of thousands touched by them, and we are thrilled to welcome UPMC Washington and UPMC Greene to UPMC.”
Despite scrutiny of the move in an op-ed last fall by SEIU Healthcare Pennsylvania, the transaction passed as the union advocated for the Assurance of Voluntary Compliance that UPMC agreed to with the attorney general as a condition for the takeover of Washington Health.
While the agreement contains protections for employees and the community, union leaders said it should have done more to ensure facilities stay open and jobs aren’t cut.
“We are united to hold UPMC accountable to abide by the agreement as well as honor the promises that have been made to our community to invest $300 million and maintain all services, insurance plan access, jobs and union contract standards,” SEIU said in a statement.
“The healthcare workforce is already struggling with a severe staffing crisis, the lingering effects of the pandemic, turnover, burnout and inflation. Any cuts – such as the service terminations, closures, layoffs and pay reductions that UPMC has carried out across its system – would be devastating to Washington. UPMC must instead, as promised, invest significant resources in our workforce and the care we deliver.”
The completion of the deal comes on the heels of UPMC announcing layoffs of around 1,000 employees, mostly of non-clinical and administrative staff.
After experiencing a jump in labor costs by 6.4% to $9.7 billion in 2023, contributing to a $198 million operating loss, the health system has turned to reducing expenses.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
UPMC will take over Washington Health System’s two hospitals, renamed UPMC Washington and UPMC Greene, and invest at least $300 million over 10 years as part of the transaction.
The health system reached an agreement with the attorney general that offers protections for employee contracts and benefits.