AG Corbett Negotiates Two Agreements Between UPMC and Mercy

PITTSBURGH – Attorney General Tom Corbett announced that his office has negotiated two agreements that address charitable trusts and antitrust concerns surrounding the University of Pittsburgh Medical Center’s proposed purchase of The Mercy Hospital of Pittsburgh, Mercy Primary Care Inc., Emergency Medicine Association of Pittsburgh, Mercy Physician Group and Mercy Neurosurgery Group.

The Attorney General’s Charitable Trusts Section filed a joint petition in Allegheny County Orphan’s Court that preserves Mercy’s charitable mission and protects the hospital from an uncertain future. The office’s Antitrust Section filed a consent agreement in U.S. District Court for the Western District of Pennsylvania that seeks to preserve health-care competition in the region while ensuring good faith negotiations with health plans to maintain high quality and affordable health services to the community.

Corbett said, “The merger between UPMC and Mercy will generate $100 million over six years for the Pittsburgh Mercy Heath System, which will provide the Sisters of Mercy with the opportunity to effectively enhance programs for the poor and continue the charitable mission that they have pursued for the past 160 years.”

UPMC will also make contributions over the next six years to the Pittsburgh Mercy Foundation equal to the foundation’s existing funds restricted to Mercy Hospital on the transaction’s Closing Date. The contributions will be restricted to supporting Mercy Hospital and the ethical and religious directives for Catholic health care services the hospital has historically provided.

The Attorney General’s Office is responsible for ensuring that hospital transactions comply with state laws regulating charitable non-profit corporations and Federal and State Antitrust laws.

As part of the antitrust agreement, UPMC is responsible for submitting before the end of each fiscal year an annual report on compliance with all the provisions of the agreement to the Attorney General’s Office.

To resolve the antitrust concerns, the agreement requires UPMC to:

Extend existing health plan contracts and their pricing with Mercy for eight years.

Negotiate in good faith, contracts for inpatient and outpatient hospital services at UPMC Mercy. If the negotiations break down, the health plan may request binding arbitration for a contract involving certain services where Mercy is a significant provider, such as trauma, burns and obstetrics. The arbitration panel will include individuals appointed by The Sisters of Mercy, the Pittsburgh Chamber of Commerce, the Pittsburgh Business Group on Health, the health plan and UPMC.

Cooperate in the transfer of patients to non-UPMC facilities when those patients have a health plan, which does not have UPMC as a provider and not refer a patient to UPMC facilities when those facilities do not participate in the patient’s health plan.

Maintain an open medical staff at UPMC Mercy for all qualified physicians in Western Pennsylvania.

Refrain from entering into any health plan contract that expressly limits a UPMC Health Care Provider’s ability to contract with another health plan.

Provide access and equal treatment to UPMC Mercy’s hospital services even if the patient purchases other health-care services from non UPMC providers, is underinsured or uninsured.

Provide a written notice to the Attorney General’s Office before acquiring any hospital in Western Pennsylvania, or permitting any hospital in Western Pennsylvania to acquire a UPMC member hospital.

Pay $175,000 in investigation costs.

Corbett said that no portion of this agreement affects or alters any provision in the consent decree between the Attorney General’s Office and UPMC, which was filed in 2001.

Corbett noted that as part of the agreement the office worked with the Federal Trade Commission (FTC). The FTC has not completed their review.

The agreements were negotiated by Chief Deputy Attorney General James A. Donahue, III, and Deputy Attorney General Jennifer A. Thomson, of the Attorney General’s Antitrust Section and Chief Deputy Attorney General Mark Pacella and Senior Deputy Attorney General Eugene Herne of the Attorney General’s Charitable Trusts and Organizations Section.

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