UPMC merger plan would im­prove sys­tem’s reach north of Pitts­burgh

Modern Healthcare - - REGIONAL NEWS - —Bob Her­man

Pitts­burgh-based UPMC and Jame­son Health Sys­tem, New Cas­tle, Pa., have signed a let­ter of in­tent to merge, a move that would beef up UPMC’s provider dom­i­nance north of the city.

UPMC would invest $70 mil­lion in Jame­son, a strug­gling 218-bed, two-cam­pus hos­pi­tal sys­tem about 75 miles north of down­town Pitts­burgh. At least $15 mil­lion would be spent in the next two years.

“Small sys­tems like Jame­son are un­der­stand­ably try­ing to fig­ure out where they fit into that land­scape,” said Rex Burgdor­fer, a vice pres­i­dent at Ju­niper Ad­vi­sory, an in­vest­ment bank­ing firm that ad­vises providers on merger and ac­qui­si­tion trans­ac­tions.

UPMC al­ready has a pres­ence in the re­gion. UPMC Hori­zon, a 159-bed hos­pi­tal, has cam­puses in nearby Greenville and Far­rell, Pa. UPMC of­fi­cials said the merger would al­low the sys­tem to cut costs and bet­ter co­or­di­nate care in the re­gion, common re­frains heard in the health­care in­dus­try’s con­sol­i­da­tion wave. Jame­son ul­ti­mately chose UPMC as its part­ner be­cause of its prox­im­ity and strong fi­nan­cial back­ground.

Jame­son, which has 1,300 em­ploy­ees and about $128 mil­lion in rev­enue, has seen its red ink grow in the past two years.

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