HVHS latest health system to weigh future options
Hammered by persistently higher labor costs and stagnant revenue, Heritage Valley Health System is the latest Pittsburgharea health care provider to begin weighing its options for the future.
For HVHS, the options include merging with a larger health system, according to two people who were familiar with the discussions, and HVHS has been in talks with Highmark Health’s 14-hospital Allegheny Health Network about a partnership that would help ease the smaller health system’s financial stress. The two people declined to be identified because they were not authorized to speak publicly about the issue, but said HVHS had approached other larger networks as well.
AHN spokesman Dan Laurent declined to comment Wednesday.
Heritage Valley Health System was created in 1983 and operates hospitals in Beaver, McKees Rocks and Sewickley. The system employs more than 3,600 people.
HVHS President and CEO Norm Mitry said that the system’s board of directors had been considering the system’s direction for “quite a long time” and that no decisions had been made, despite rampant rumors.
“Heritage Valley struggles — I’m not going to hide that,” Mr. Mitry said Tuesday. “Health care across the country is in a world of hurt. The board has been going through a process for quite a long time to think about the future of the system.”
Last year, Fitch Ratings downgraded HVHS’ default rating to A+ from AA-, citing “several years of sizable operating losses.” Losses at the system were expected to continue through 2024, according to the ratings agency.
HVHS is one of only two remaining independent hospital systems in the Pittsburgh region; the other is St. Clair Health in Mt. Lebanon. Unlike many independents in the
U.S., St. Clair has historically had a robust balance sheet and no pressing need to become part of a larger system.
Other community health systems in the region though — struggling with higher labor costs and brutal competition — have already struck merger deals, including Butler Health System and Excela Health, which tied up in January 2023 to create the fivehospital Independence Health System, and Washington Health System, a two-hospital system that is undergoing regulatory review to become part of UPMC.
WHS cited financial difficulties for its reason in moving to become part of UPMC.
After four consecutive years of operating losses through 2023 at AHN, that system’s appetite for a deal that would prop up Heritage Valley Health System is uncertain.
Moreover, an Allegheny Health Network partnership could mean unwinding HVHS’ relationship with AHN rival UPMC, which includes jointly operated cancer care services.
Allegheny Health Network opened the 34,000square-foot AHN Cancer Institute-Beaver in Monaca in 2019 to serve that county, competing directly for patients with the HVHS-UPMC partnership.
Mr. Mitry said HVHS board deliberations were continuing about the system’s future.
“There has been no determination,” he said Tuesday.