Pittsburgh-based ecosystems UPMC Health and Highmark Health continue to shape the Harrisburg market into another front in their statewide competition. UPMC Pinnacle leads the market’s hospital sector while Highmark counterbalances with its dominant health plan membership. Penn State Health—in which Highmark maintains a minority stake—is rapidly expanding, acquiring Geisinger Holy Spirit and building two new hospitals near UPMC Pinnacle sites. In response, UPMC has expanded its Harrisburg and West Shore hospitals and built new outpatient locations throughout the market. WellSpan Health is also expanding—albeit more slowly—and forming closer partnerships with Capital BlueCross and Highmark. The IDN likely aims to align more closely with a payer to counter the payer-provider networks of UPMC and Penn State. Each system benefits from preferred network placement in affiliated payers’ narrow- and tiered-network health plans. As the market’s health systems build themselves into vertically integrated networks, they are acquiring and affiliating with more physicians in the market, seeking to improve care coordination and keep more patients within their networks. This increased consolidation among providers is supporting new value-based care arrangements, which have been relatively nascent in the market until recently. As UPMC, WellSpan, and Penn State continue to grow, they will likely explore more innovative payment arrangements—like the new, outcomes-based contracts between Highmark and UCB and AstraZeneca—as they work to improve quality and reduce costs.

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