The consent decree caps off a heated battle between the two institutions and opponents of the merger—including Highmark Blue Cross Blue Shield and other insurers, as well as the West Penn Allegheny Health System—who tried to block the merger using legal, regulatory and public pressure.

Opponents reacted strongly to the merger, worrying that UPMC would raise prices, use Children’s to leverage business in its own UPMC Health Plan and lock out physicians who didn’t belong to the plan or work on the UPMC payroll.

The consent decree addresses these issues and seems to satisfy everyone, while also involving concessions. Highmark has also extended its contract with Children’s by 20 years, raising concerns of the business community.

The deal puts all of the region’s tertiary pediatric care under UPMC’s control and will still have impacts on the balance of power in the Pittsburgh health care market area.

Jim Donahue III, Esq., chief deputy attorney general of the antitrust section, said he and other authors "fought over every word" of the 21-page consent decree. Among other things, the document:

• Spells out a legal process for contract negotiations and arbitration between insurers and Children’s.

• Binds UPMC and Children’s to their joint pledge to provide medically necessary services for all children regardless of their ability to pay or the health plan they belong to.

• States that Children’s will continue to offer pediatric residency rotations to regional hospitals.

• States that physicians will not be required to participate in the UPMC Health Plan or be employed by UPMC to earn staff privileges at Children’s. UPMC currently owns University of Pittsburgh Physicians, which practices full time at Children’s.

Donahue said the intent was to maintain the status quo and allow the merger to happen for the sake of Children’s Hospital’s future. No one complained to them about the final document, he said, which was crafted with input from insurers, physicians, competing hospitals and the business community. To Children’s and UPMC, the final decree simply reiterated what they had been promising all along, particularly access for all children.

"While we’re supportive of the consent decree, many of the details contained in the document were already negotiated and agreed upon by Children’s and UPMC’s Board of Trustees through the definitive agreement," said Ron Violi, CEO of Children’s Hospital.

Christine Whipple, executive director of the Pittsburgh Business Group on Health, a group of nearly 40 Pittsburgh employers, said her group did not oppose the merger but wanted more information.

The group spelled out its expectations:

• No exclusive contract agreements between UPMC and Children’s.

• No special staffing privileges for doctors.

• No costs higher than those in markets with two children’s hospitals.

• Special reporting of finances to a third party.

Whipple said the consent decree directly addressed the first two concerns, and indirectly touched upon the second two through rules for contract arbitration.

Cliff Shannon, president of the SMC Business Councils, said the consent decree is about as perfect as you can make such a document. But it doesn’t prevent UPMC from being aggressive in their advertising and implying that its health plan is the best for children and families because of Children’s, he said. Shannon also pointed out that the decree includes "expected patient volume" on a long list of things arbiters will consider when ruling on contract prices.

"What about Aetna and HealthAmerica and other insurers?" Shannon asked. "It seems that, if contracts are arbitrated according to patient volumes, Highmark and UPMC are ensuring favored pricing."

As of last month, Gateway Health Plan, HealthAmerica and Managed Care of America had not withdrawn their lawsuits contesting the merger. Gateway and Managed Care had said they were working to extend current contracts with Children’s. West Penn Allegheny Health System withdrew its suit based on the guarantees of the consent decree, said health system spokesman Tom Chakurda.

"We opposed the merger because we had serious reservations about patients continuing to have access and about the ability of physicians to work inter-institutionally. It was also a cost issue—the monopolization of pediatric tertiary care," Chakurda said. "Our concerns were addressed and we’re thankful for that."

Highmark withdrew its lawsuit the same day that the consent decree became public, which was the same day it had reached a 20-year contract with Children’s. On the previous day, UPMC had asked that fact-finding documents filed by Highmark as part of its antitrust suit be made public.

Highmark spokesman Bill Miller dismissed the timing of those events, saying that negotiations with Children’s had been ongoing and that Highmark did not know what day the attorney general would unveil the consent decree. As for UPMC’s call for public disclosure, Miller said Highmark’s filings would have become public record at a hearing the following week. UPMC spokeswoman Jane Duffield said someone told the health system that Highmark intended to push for a closed hearing.

The consent decree did a good job of addressing Highmark’s concerns, said Miller. "Did we make concessions? That’s difficult to say. It’s not the kind of process where we ask for X and we get X or we get Y. It will be a matter of waiting a few years to see if the language is strong enough," he said.

While the consent decree ensures access to Children’s for all Highmark subscribers, Highmark solidified its market position with a 20-year extension of the Children’s contract it had through 2006. "It was good for our members—better than negotiating with UPMC down the road," said Miller. "The 20-year contract removes some of the burden of being vigilant."

Highmark’s long-term contract, more so than the consent decree, has grabbed the attention of the business community. Shannon said he’d be reviewing the contract once it’s filed with the state to look for differences. "If all of the terms and conditions are the same, I wonder what all the fuss was about," said Shannon, referring to the lengthy negotiations needed to finalize a contract that had no opposition from UPMC.

Paul Dishart, M.D., president of the Allegheny County Medical Society (ACMS), wondered why Highmark resorted to legal action in the first place. "I understand that market share is a big issue. But using health care dollars to file a lawsuit infuriated me," said Dishart.

Highmark—which argued the legal move as a strategic business decision to save money down the road—did make a presentation to ACMS members about the merger, as did UPMC and West Penn Allegheny, Dishart said. ACMS did not take up a position on the merger beyond backing the agreed need for an upgraded Children’s hospital.

"In addition to the building, research money in pediatrics is vital to the subspecialties of pediatrics," Dishart said. If UPMC succeeds in growing its research funding as planned, Dishart wondered if the health system would also grow Children’s current training of regional physicians from competing hospitals.

Miller said that cooperative clinical programs between Children’s and other, non-UPMC hospitals are not addressed in the consent decree. Children’s can emphasize over and over that its services will be open to all children, but in five years, Children’s Hospital governance will cease to exist as it is now and another health system might not be comfortable having a UPMC program under its roof.

Duffield agreed that that could happen. But she said there is evidence it can work, such as UPMC’s University of Pittsburgh Cancer Institute program at St. Clair Hospital. "We have no plans to close any existing Children’s programs within other health systems. It wouldn’t be in our best interest," she said. Duffield characterized UPMC’s push for a merger with Children’s as the logical move for both.