Allegheny Health Network moves to acquire 2 Pennsylvania hospitals

Allegheny Health Network is looking to expand its footprint in western Pennsylvania.

Allegheny Health Network has signed a letter of intent to acquire the Heritage Valley Health System in western Pennsylvania.

Allegheny has reached a letter of intent to acquire the Heritage Valley Health System, which operates two hospitals and a host of other clinics and outpatient facilities in western Pennsylvania. Allegheny and Heritage Valley disclosed the deal this week.

Part of Highmark Health, Allegheny operates 14 hospitals and serves nearly half of Pennsylvania’s counties, along with portions of New York, Ohio, and West Virginia. If regulators sign off on the deal, Allegheny will operate a total of 16 hospitals.

The deal comes a little over a year after Heritage Valley closed one of its hospitals, Kennedy Hospital, just outside Pittsburgh. The hospital had reduced its bed count and services over the years. Heritage Valley cited financial pressures in the decision to close the facility.

Norman Mitry, president and CEO of Heritage Valley, says the merger with Allegheny will help protect the system’s viability. Heritage Valley’s two hospitals, Heritage Valley Beaver and Heritage Valley Sewickley, have a total of 540 beds.

“Heritage Valley takes a significant step forward in securing its future and strengthening its commitment to the communities we serve," Mitry said in a statement.

Mitry said that Highmark “shares our commitment to community health, our patient-first values, and our vision for advancing a sustainable model of providing accessible, high-quality and affordable care for everyone.”

Allegheny Health says it plans to make “significant investments” to Heritage Valley over the next 10 years, including initiatives to expand healthcare services, upgrade facilities, and improve its information technology systems. Highmark and Allegheny note that they have invested $2 billion into western Pennsylvania over the past decade, including building new hospitals, cancer centers and surgery facilities.

Mark Sevco, president of Allegheny Health, said the system is looking forward to collaborating with Heritage Valley to improve patient care in the region.

"HVHS has a long and distinguished history of providing high-quality services, and we're confident that, together, we will continue to make a real difference in the health and wellness of those who live in western Allegheny and Beaver counties,” Sevco said in a statement.

Highmark has thousands of patients getting care at Heritage Valley’s facilities, and they said the acquisition of the system will also ensure more care for its members.

"This affiliation with Heritage Valley reinforces our dedication to providing the communities of Western Pennsylvania with the high-quality, patient-centered care they deserve through our Living Health model, leading to improved health experiences and outcomes for our members and patients, "Highmark Health is committed to strengthening our regional healthcare ecosystem through strategic partnerships with exceptional organizations," David Holmberg, CEO of Highmark Health, said in a statement.

While there were only a handful of hospital mergers in the early part of the year, more hospitals and health systems have been striking deals in the past few months.

There were 15 announced hospital mergers and acquisitions in the third quarter of the year, according to Kaufman Hall. There were only 13 deals in the first six months of the year.

Over half of the deals in the third quarter involved hospitals in some type of financial distress. Analysts expect to see more hospital mergers in the coming months, as struggling hospitals look to find partners to stay afloat.