![\"\"\/](\"https:\/\/www.healthcaredive.com\/static\/img\/play.svg?313321260226\")
\n Listen to the article<\/p>\n
\n Listen to the article<\/p>\n
4 min<\/p>\n
This audio is auto-generated. Please let us know if you have feedback<\/a>.<\/p>\n Dive Brief:<\/p>\n Allegheny Health Network has completed its merger<\/a> with fellow Pennsylvania-based provider Heritage Valley Health System, the organizations said Wednesday.\u00a0 Dive Insight:\u00a0<\/p>\n The combination of AHN \u2014 part of the $32 billion healthcare giant Highmark Health, which also operates insurance and health technology divisions \u2014 and Heritage Valley, a two-hospital system servicing Pennsylvania\u2019s western edge, was first announced in October<\/a>.<\/p>\n The deal faced brief opposition from state regulators.\u00a0Pennsylvania Attorney General Dave Sunday sued to block the merger in late June, arguing it would \u201csubstantially lessen or eliminate competition\u201d in acute care hospital and radiation oncology services in Beaver and Allegheny Counties, leading to higher prices for patients and payers.<\/p>\n But AHN and regulators reached a settlement. The deal requires the combined provider to maintain Heritage Valley\u2019s Beaver Hospital as long as there\u2019s sufficient demand for its services and keep operating Sewickley Hospital for at least five years, among other measures.\u00a0<\/p>\n \u201cWhen hospital systems change ownership, there is always the potential for impacts on access to care,\u201d Sunday said in a statement Wednesday. \u201cThe hardworking staff in my office negotiated an agreement that protects access to high-quality health care services for these western Pennsylvania communities and ensures those services remain available for at least the next decade.\u201d<\/p>\n In addition to Heritage Valley\u2019s Beaver and Sewickley hospitals, AHN is gaining 36 physician offices and seven multi-speciality facilities that provide primary care, diagnostic and imaging services, rehabilitation care and women\u2019s health services.<\/p>\n Heritage Valley\u2019s roughly 3,000 employees will also join AHN, including about 500 employed and affiliated physicians, the providers said. Once the merger is complete, AHN will employ about 27,000 workers.\u00a0<\/p>\n In the press release, AHN and Heritage Valley argued their combination will ensure access to healthcare in western Pennsylvania \u201cfor generations to come.\u201d The combined system has committed to spend about $285 million\u202fover the next decade to improve Heritage Valley\u2019s clinical services, facilities and IT infrastructure, including implementing a system-wise Epic electronic health record.<\/p>\n The combination could also be a financial lifeline for Heritage Valley, which was downgraded by credit ratings agency Fitch Ratings<\/a> last summer after reporting \u201cwider-than-anticipated\u201d losses during its 2024 fiscal year.\u00a0<\/p>\n The provider posted a $56 million operating loss that year, including a $14.1 million impairment charge linked to the closure of its Kennedy Hospital, according to Fitch. Heritage Valley shut down the hospital last summer<\/a>, attributing the closure to falling patient volumes and declining reimbursement from commercial payers.<\/p>\n Heritage Valley expected to post another operating loss of $46 million in its 2025 fiscal year, according to Fitch.<\/p>\n Meanwhile, AHN has grown revenue and operating income<\/a>, largely thanks to stable volumes and more lucrative patient cases, the system said in its most recent financial quarter. (Still, AHN\u2019s net income was down year over year, from $13.4 million to $6 million in the quarter ended March 31 due to declining investment earnings.)<\/p>\n \u201cIn today\u2019s healthcare environment, strategic affiliations and collaborations are essential to preserving affordable, quality access for the patients, members and communities we serve,\u201d David Holmberg, the CEO of AHN parent Highmark Health, said in a statement.<\/p>\n Hospital and health system M&A picked up<\/a> in the first quarter this year, following a lull in 2025 amid financial stress and policy uncertainty from Washington, according to consultancy Kaufman Hall.\u00a0<\/p>\n Divestitures have made up the lion\u2019s share of deals, as providers focus on shoring up their finances amid major cuts to federal health spending, particularly to the safety-net insurance program Medicaid<\/a>.\u00a0<\/p>\n
\nThe deal brings two Heritage Valley hospitals and dozens of other care sites into the Highmark Health-owned system, boosting AHN\u2019s facility count to 16 hospitals across the greater western Pennsylvania region.\u00a0
\nThe deal received approval from state and federal regulators this week, according to the health systems\u2019 press release. Pennsylvania\u2019s attorney general sued to block the deal in late June<\/a>\u00a0over competitive concerns, but quickly reached a settlement with AHN allowing the combination to move forward<\/a>.\u00a0<\/p>\n