Hospitals will merge today
The Derrick, 11/30/01 By JUDITH O. ETZEL

A special thank you goes out to The Derrick for allowing this article to be posted


The formal merger of Pittsburgh-based UPMC Health System and Northwest Health System, the parent company of hospitals in Oil City and Franklin and several other health care agencies, happens at noon today.

Lawyers and board members from both non-profit health organizations will sign the merger documents prior to a luncheon at Wanango Country Club. The act of signature will set into motion major changes in how health care is provided in Venango County.

At the heart of the deal, one in which UPMC will own all of Northwest's property and employ all its 1,300-member staff, is a $65 million hospital pegged for a 144-acre site in Cranberry Township. Preliminary site work is under way and groundbreaking ceremonies will be held in the spring.

Today's sign-on-the-bottom-line merger comes two years after the sprawling UPMC organization and Northwest announced their intentions to join forces. Originally, UPMC was scheduled to take the reins in December 1999, two months after the initial announcement.

"We are bit late on this but we spent a lot of time creating the merger agreement and I think that was appropriate. And changing the site (from Sugarcreek to Cranberry) cost us time. That, in turn, delayed the design phase because we were building in a different place," said Neil Todhunter, the CEO at Northwest.

In terms of numbers, the merger has enormous implications: It affects the county's single largest work force - 1,300 people. It will result in the single largest building project ever in the county - $65 million. And it has the potential to gain even more momentum, with a 50-office physicians building, an assisted living complex and a psychiatric treatment center all tentatively planned for the UPMC Northwest acreage in Cranberry Township.

What will change immediately in today's merger signing is the name, the board of directors, the title to property and the employees' wage payer.

The new organization is known as UPMC Northwest and will be the newest addition to the Pittsburgh-based health system's string of hospitals, surgical and rehabilitation centers, specialty hospitals and other facilities throughout western Pennsylvania. Northwest will no longer operate independently but will conduct its business under the UPMC umbrella.

The board of directors, until now solely filled by local residents who served as overseers of Northwest Health System, will change dramatically.

Serving on the new UPMC Northwest board through what is expected to be a three-year construction period will be William Clark, James Daugherty, Paula Logue-Phenicie, Sanford Powell, Bruce Rosen and Gail Welch, all of Oil City; and Edward Cowart, Henry Gent III, James Knarr, James McLaughlin, Robert Miller, John O'Connor, Keith Pemrick and Richard O. Way, all of Franklin. Three UPMC representatives from Pittsburgh also will serve on the board.

Daugherty and Knarr will be UPMC Northwest's representatives on the parent UPMC Health System board which has representation from all 19 hospitals in its chain.

Northwest's property, which will become UPMC's, includes the hospitals in Oil City and Franklin, the West Unit in Franklin, the Outpatient Physical Therapy Facility on Sugarcreek's Circle Street, the Rowe Building in Oil City, Sugarcreek Station and satellite offices in Knox, Emlenton and Grove City.

The newest addition of property will be the former Quaker State Innovation Center in Cranberry Township. That purchase agreement is nearly completed.

The Oil City and Franklin hospitals will remain in operation until the new four-story hospital in Cranberry Township opens, expected to be sometime in mid-2004. One year after the new hospital opens, the main Oil City and Franklin hospitals will be demolished if no buyer or tenant is found.

Efforts to try and fill those buildings, said Todhunter, are in the preliminary stages.

The Northwest workforce, pegged at about 1,300, will have its paychecks signed by UPMC from today on. Affected by the merger are Northwest people working at the hospitals, the satellite offices, Sugar Creek Station, Visiting Nurses Association and VNA Home Care. Northwest is the largest single employer in Venango County.

No merger-related changes in staff are planned, said Todhunter, who keeps his role at top administrator.

Today's business agreement also sets into motion a specific timeline, one which requires UPMC to start construction of the new Northwest hospital within 18 months. It also stipulates the medical behemoth build the new hospital within five years.

Northwest was the first health system in UPMC's vast territory to gain a new hospital in a merger deal.

The design of the new Northwest hospital is completed, said Todhunter, and the HBE Inc. firm of St. Louis, the designer, will go out for various construction bids within the next few weeks.

Today's merger kick-in signals the end of a 10-year effort to achieve a new hospital. When the Oil City and Franklin hospitals merged in 1992, the aim was to consolidate services, save money and ratchet up available health services. A reconfiguration of those health services a year later sparked a bitter controversy between the two hospitals, resulting in a court settlement which directed Northwest to build a new hospital.

In October 1999, Northwest capped that progress by announcing it had found a partner with sufficient funds - UPMC - to build a new health care center in Venango County.

"It's been 10 years since the merger and I think people support the concept of one unified hospital. This merger with UPMC is positive and our organization will gain substantially: a new facility and a relationship with UPMC's physicians and technologies that advance health care for this community. The opportunities are staggering," said Todhunter.

UPMC's acquisition of Northwest, he continued, should not be compared with mergers involving banks, oil companies and similar corporations which eventually impacted Venango County in ways that decimated the local economy.

"Health care is different then oil and banks. We need your person, your physical presence, to do our jobs. And we need to treat you in the local environment, unlike doing your banking with a card somewhere else. This merger works to this community's advantage because it keeps quality health care here," said Todhunter.