West Penn Allegheny, Highmark Agree to Affiliation

Ropes & Gray’s health care practice advised West Penn Allegheny Health System on its affiliation agreement with Highmark Inc., the largest Blue Cross Blue Shield insurer in Pennsylvania, West Virginia, Maryland and Delaware.

The creation by a major insurer and an independent hospital system to unite health care delivery and financing is a “game changer” for national health care, according to industry observers. The agreement will soon be filed with the Pennsylvania Insurance Department and is subject to review by the Pennsylvania Attorney General and other state and federal regulators.

A physician-led health care organization based in Pittsburgh, West Penn Allegheny Health System is a network of five hospitals, four outpatient care centers and dozens of primary care offices throughout Western Pennsylvania. Highmark, also headquartered in Pittsburgh, is an independent licensee of Blue Cross and Blue Shield plans with 4.8 million members and 19,500 employees across the country.

Officials from both organizations said the agreement will create a more efficient health care system with lower costs and expanded services for patients as well as enhanced education and training for physicians and other health care professionals.

As lead transaction counsel, Ropes & Gray advised West Penn Allegheny Health System on the affiliation agreement, funding terms, fiduciary and tax-exemption issues and governmental approvals.

The Ropes & Gray team that worked on the matter was led by Chesley (a Pittsburgh native) and included Boston-based health care partner Dan Roble, Boston-based 501(c)(3) partners Kendi Ozmon and Lorry Spitzer, and Boston-based health care associate Michael Lampert.