July 28--State regulators reviewing Highmark Inc.'s proposed purchase of West Penn Allegheny Health System opened a second public comment period on the deal, delaying the health insurer's rescue of the financially fragile Pittsburgh hospital network.

The state Insurance Department issued a notice on Friday requesting public comment on the time-sensitive deal for "an indefinite period of time."

Opening an "indefinite" comment period is standard process, said state spokeswoman Melissa Fox.

There's no requirement for how long it might last, but "the notice to close the comment period must be announced at least 30 days prior to the closing," Fox said. The first public comment period, initially termed "indefinite," lasted seven months until June 1, Fox said.

Highmark, the state's largest health insurer, said last year that it needed approval of the $475 million acquisition by June to prevent the health system's collapse. More recently, Highmark officials said they hoped to have a decision from the department by October or November.

Highmark spokesman Michael Weinstein declined to comment on the effect of a second request for public input.

"We're continuing to work with the department as they conduct an expeditious review," he said.

Delays should not be surprising, given the size and complexity of the deal, said Jan Jennings, CEO of Downtown consulting firm American Healthcare Solutions.

"Time does not work to the advantage of West Penn Allegheny and Highmark on this deal," Jennings said, noting the health system's ongoing financial losses.

"It's a delay, and that's unfortunate. On the other hand, with the number of people who will look at this deal ... they'll be a lot more market-worthy because they've had the tires kicked," he said.

West Penn Allegheny lost $87.8 million on operations in the nine months ended March 31, more than double the operating loss for that period last year, according to its most recent financial report. It received $200 million in grants and loans from Highmark in the past year but is not scheduled to receive another payment until April.

The opportunity for more public comment became necessary when Highmark this month amended an Insurance Department filing that it submitted in November to start the review.

The amendment described changes to Highmark's business since then: plans to create subsidiaries to acquire doctor practices and land for outpatient medical centers, the completed affiliation with Blue Cross Blue Shield of Delaware, its contract extension with UPMC, and the hiring of CEO William Winkenwerder.

The acquisition of West Penn Allegheny is key to Highmark's strategy to create an integrated health care system to compete with UPMC, the region's dominant medical services network.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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