UPMC bonds would fund major health care spending in midstate
Health care giant University of Pittsburgh Medical Center plans to spend $235 million in the Harrisburg, York and Lancaster areas in 2018. Much of it would go toward a new hospital in York, with some also spent at three other midstate hospitals.
Another $235 million could "potentially" go toward refinancing the loan Harrisburg-based PinnacleHealth System used for its recent purchase of four hospitals. UPMC and PinnacleHealth are in the process of merging, although the transaction still needs government approval.
The building plans were revealed Thursday during a public hearing on raplidly-expanding UPMC's application for a bond issue through the Pennsylvania Economic Development Financing Authority. UPMC expects to receive $750 million from the bonds,
About $350 million would be used to pay off prior debt and about $400 would go toward new building projects and renovations. All told, UPMC plans to spend $900,000 million on building projects and related upgrades in western and central Pennsylvania in 2018, according to UPMC's Simon Goehring, who represented UPMC at Thursday's hearing.
While PEDFA serves as a conduit for selling the bonds, there is no taxpayer funding involved in the bond issue or the funds UPMC would receive, PEDFA Executive Director Steve Drizos said. Going through PEDFA will enable UPMC to sell bonds that are exempt from state and federal interest taxes, resulting in lower costs for bond buyers, and lower financing costs for UPMC.
At Thursday's legally-required public hearing, Dan Dorsheimer of AIA Benefits Resource Group asked whether UPMC plans to stops accepting any health insurance plans at the central Pennsylvania health care facilities that will come under its umbrella as a result of the PinnacleHealth merger.
Goehring replied that UPMC has no short-term plans to shut out any insurers, but "I can't say in the long run how things will turn out." UPMC is unusual among health systems in that it also owns a health insurance company.
In the Pittsburgh region, a dispute between UPMC and health insurer Highmark resulted in UPMC no longer accepting Highmark coverage.
Dorsheimer, whose firm manages employer health benefits and also is an insurance broker, said it's "disruptive" and detrimental to health care consumers when any local health care providers won't accept their health insurance.
"You witnessed what went on in Pittsburgh. It's been very disruptive," he said following the hearing.
The $235 million that will be spent in the midstate will be concentrated at facilities including Carlisle Regional Medical Center, York Memorial Hospital, which is being replaced, Lancaster Regional Medical Center, and Heart of Lancaster Regional Medical Center. Those are the four recently acquired by PinnacleHealth for $231 million.
Goehring also said UPMC also plans to spend some of the bond funds on a new hospital in the Pittsburgh area. Some also will be spent in north central Pennsylvania, where UPMC has acquired or plans to acquire several hospitals including the former Susquehanna Health.
A PEDFA committee has already approved the UPMC bond application. Final approval comes from Gov. Tom Wolf. Historically, the governor has typically approved applications that have been approved by the executive board, Drizos said.