Highmark says UPMC dispute has no bearing on CEO change

May 22--Highmark's board seems focused on things beyond the dispute with the University of Pittsburgh Medical Center that could prove devastating for Highmark and its customers.

A spokesman said the dispute had nothing to do with the decision to select David Holmberg to replace Dr. William Winkenwerder as CEO.

Spokesman David Carter said Holmberg was chosen for his ability to transform Highmark into a company more focused on customers taking a bigger role in health care-related decisions.

"He's very focused on consumers," Carter said. "The board decided that David Holmberg was the right executive at the right time to lead the transformation of the company ... his skill set will propel us in new directions."

Any fallout from the Highmark-UPMC dispute will likely have repercussions in the Harrisburg region, where Highmark employs about 4,000 people, with many based at the Highmark facility near Camp Hill in Cumberland County.

Holmberg, 55, has been with Highmark since 2007. He most recently served as president of diversified businesses, overseeing businesses that generated more than $3.5 billion in revenues, a Highmark news release said.

Immediately before joining Highmark, he was executive vice president of operations for Jo-Ann Stores, Inc. Before that he headed a company involved with optical centers at retailers including Sears, Target and BJ's Wholesale Clubs.

Winkenwerder, a family doctor, was hired less than two years ago after heading the U.S. military's health system. He replaced Dr. Ken Melani, who was fired after a fight with the husband of a Highmark employee with whom he was having an affair. The dispute with UPMC was already a looming crisis.

Asked if Holmberg is considered better-suited to resolve the dispute, Carter said: "UPMC wasn't a factor in this decision by the board."

It's a grave situation nonetheless.

The dispute long ago turned public and bitter, with both sides running ads trying to turn western Pennsylvania businesses and consumers against the other.

As it stands, UPMC plans to kick Highmark out of its network when their contact expires Dec. 31. That means people with Highmark health insurance can still use UPMC doctors and hospitals, but in many cases they will pay higher, out-of-network costs.

The dispute goes back several years. Even before the open hostility, each had blamed the other for limiting choice and triggering spiraling health care costs.

It turned ugly in 2011 after Highmark bought the seven hospital-West Penn Allegheny Health System, saying it acquired the struggling system to ensure choice for its members.

UPMC said the acquisition turned Highmark into a competitor -- even as UPMC operated a relatively small health insurance plan of its own -- and it would no longer negotiate.

Highmark has said it wants to reach agreeable contact terms, while UPMC has insisted the door is closed. With UPMC's local dominance and reputation as a world-class system, many businesses and consumers would be inclined to switch insurers to maintain access to UPMC. Meanwhile, other major insurers have raised their profiles in western Pennsylvania, where Highmark has long dominated, and entered into contracts with UPMC.

The situation has spurred involvement by Pittsburgh-area politicians seeking to protect consumers and also protect the health of two of the area's biggest employers.

State Rep. Tony DeLuca, D-Allegheny recently introduced a bill that would allow the state insurance commissioner to force the two sides to the bargaining table and possibly impose a mediated contact. Others have also introduced bills.

DeLuca said it's normally not the government's place to intervene in such disputes, but it's appropriate in the case of non-profits with such critical roles in the community.

Meanwhile, DeLuca said he was "shocked" by the replacement of Winkenwerder and "I don't know what to make of it."

Gov. Tom Corbett also has taken an interest in the Highmark-UPMC situation, citing the potential for "confusion" and negative consequences for consumers in western Pennsylvania.

Corbett spokeswoman Christine Cronkright said in an emailed statement Wednesday, "The Pa. Departments of Health and Insurance continue to co-manage an interagency task force to monitor the ongoing communications of UPMC and Highmark and maintain the state's role in protecting consumers. Our goal for western Pennsylvania and the entire commonwealth remains continued access to quality and affordable healthcare for consumers in a competitive and healthy marketplace. We will continue conversations with both entities to ensure that goal is met. As non-profit entities with an obligation to their community, the governor expects that Highmark and UPMC will maintain a focus on their higher social mission -- to responsibly serve the healthcare needs of thousands of western Pennsylvanians."

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