UPMC and Highmark Health are locked in a battle for patients in western Pennsylv

UPMC and Highmark Health are locked in a battle for patients in western Pennsylvania. UPMC started out as a hospital and expanded into health insurance, eventually becoming a $20 billion business. Highmark originated as an insurance company and later began to acquire hospitals; today, it generates about $18.2 billion in annual revenues. Highmark’s move into the hospital market precipitated a clash that forced patients to choose between their doctor and their health plan. Many experts are not certain that these large merged hospital and insurance systems are helping patients, as they often have contrary incentives. Hospitals generally want to fill their beds, whereas insurers want lower costs. The market dominated by only two healthcare systems has also reduced competition. Martin Gaynor, a professor at Carnegie Mellon University in Pittsburgh, Pennsylvania, stated that the area does not “have effective competition in this market; we have these two huge entities, circling each other looking for some kind of opening.” Rather than lowering costs, Pittsburgh’s medical spending between 2012 and 2016 rose 20%,– 5% higher than the national average. However, the two systems strategies differ. UPMC’s leadership sees itself becoming involved in every aspect of healthcare, like the Amazon of healthcare. It plans to invest in cutting-edge research in cancer, vision restoration, and transplants and attract patients worldwide. UPMC aims to invent the next groundbreaking healthcare therapy. To do so, it employs 200 software engineers and others to develop and commercialize new healthcare technologies. Highmark, in contrast, sees its future rooted in providing health insurance, and it wants to pay for healthcare, not research projects. Highmark perceives that its most important work is to keep people out of the hospital and focus on health and wellness pavilions in smaller-scale neighborhood hospitals (Johnson 2018).
1. How does the concentration of hospitals affect the healthcare services available and their costs in Pittsburgh?
2. Why do you think the two systems have such different strategies?
3. Which strategy do you think will be most successful? Why?
Please use other references/resources in addition to the following book, Healthcare in the United States: Clinical, Financial, and Operational Dimensions by Stephen L. Watson and Kenneth L. Johnson.
***Please use two supporting resources in each paragraph.
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