Every hospital bought by West Virginia University Health System is photographed, framed and hung on a Mountaineer Blue wall at the nonprofit’s headquarters.
The effect is a visual timeline of the system’s rapid growth since its founding in 1996 as a partnership between two of the state’s premier hospitals.
WVU Health System has 25 hospitals across West Virginia, Pennsylvania, Maryland and Ohio. The gallery is almost spilling into the next hallway.
It will take some rearranging to fit pictures of the five Independence Health System hospitals set to join the organization. The deal of undisclosed value is expected to close in the second half of this year, pending regulatory approval.
Since Albert Wright Jr. — an affable, measured man behind dark-rimmed glasses — took over as president and CEO in 2016, the Morgantown-based health care provider has more than tripled its footprint.
The takeover of Butler Memorial, Clarion, Frick, Latrobe and Westmoreland hospitals, collectively mired in layoffs and red ink since forming Independence in 2023, would be WVU Health System’s biggest acquisition.
It also would make the system a serious force in Western Pennsylvania, a health care market long dominated by the duopoly of UPMC and Allegheny Health Network. Right now, WVU Health System has just a toehold in the area as the owner of Uniontown Hospital.
Wright is confident his playbook for turning around hospitals — built on administrative efficiencies, expansion of clinical services and decentralized decision making — will hold up as WVU Health System leaps headfirst into this not-so-foreign land.
“If you erase that state line and you go and spend time in these hospitals in communities like Greensburg, Latrobe and Butler County, it feels a lot like the populations we serve,” Wright told TribLive last month during an interview in his office, well-lit and decorated with a 3-foot-tall bear dressed in Mountaineer gear.
“We believe our formula will help those hospitals be successful long term,” he continued.
There are signs other than the crowded photo gallery that WVU Health System is new to being a medical giant. UPMC and Allegheny Health Network executives work in Downtown Pittsburgh skyscrapers; Wright, who held a top job at UPMC Presbyterian-Shadyside before coming to West Virginia, calls the shots from a fifth-floor office.
“Everything we’re doing is sustainable,” he said.
A strategic vision
Dr. Christopher Colenda pulled up stakes at Texas A&M University in late 2009 to become chancellor of health sciences at WVU. When he arrived, he saw a four-hospital confederation struggling to adapt to a post-Great Recession world and discovered a troublesome disconnect between the academic medical center, university and faculty.
The groups were constantly bickering over money, particularly when it came to paying for the residency program at J.W. Ruby Memorial Hospital in Morgantown, he said.
He almost immediately helped craft a new strategic plan and, within a couple of years, brokered a joint operating agreement that brought the three pillars of what was then West Virginia United Health System into closer alignment. It included specific terms for the transfer of funds among them, solving the residency dispute.
Without the pact, the modern system never could have come to fruition, in his opinion.
“They would still (be complaining) about funds flow across the various entities today,” the semi-retiree said from his North Carolina home.
The reformation kicked into high gear when Colenda became the system’s president and CEO in 2014.
The system bought a hospital each year of his tenure as leader, aiming to bolster their services rather than just steer high-margin patients to the mother ship.
Wright — hired as an executive by Colenda in 2014, two years before succeeding him — “has never wavered” from that plan, Colenda said.
As a symbol of its transformation, the organization rebranded as West Virginia University Health System the year Colenda stepped down.
The formula
WVU Health System, though a nonprofit, is not a charity for needy hospitals. Its hospitals have to survive on their own bottom lines, whether they’re the prestigious academic medical center in Morgantown or the 25-bed, small-town lifelines scattered across the network.
Successful facilities get to keep the money they make. Struggling ones get a loan from the system — with interest.
“You have to have two-way risk,” Wright said.
The system didn’t have to play lender last year. Every one of its hospitals had a positive operating margin, according to financial records. Uniontown Hospital was the worst performer, coming out just $68,000 ahead through day-to-day operations.
What the corporate umbrella really offers hospitals is scale. In general, bigger organizations get better deals on medical equipment, from surgical gloves all the way to MRI machines, and can deliver services at a lower cost (though some researchers say consolidation leads to higher costs for patients).
Member hospitals also get help with human resources, finances, legal services and other back-end operations. WVU Health System tries to keep its administrative apparatus lean, capping expenses at 7.5% of net patient revenue.
And then there’s Epic, a pricey but well-regarded electronic health records system used by most major health care networks. Once implemented at Independence, it will allow doctors in Butler, Greensburg or Morgantown to see the same exact documents about a patient’s medical history.
“Having that one medical record really makes care more efficient,” said Dr. Michael Edmond, chief medical officer at WVU Health System. “We don’t end up repeating things that have been done at another hospital, because we can see everything as it’s happening.”
Independence currently uses one electronic health records system at its facilities in Butler and Clarion counties and another in Westmoreland County, spokeswoman Kelley Skoloda said. WVU Health System expects to spend $80 million installing Epic at all Independence facilities.
An $800 million overall investment package will include the Epic expense, $200 million for “routine capital” like beds and monitors, and $520 million for “strategic capital,” which includes upgrades to the Westmoreland Hospital campus and the Butler Memorial Hospital emergency room.
Possible pitfalls
Consolidation is not a surefire recipe for success in health care, even as it appears increasingly necessary for survival. Brock Slabach, chief operating officer at the National Rural Health Association, has seen plenty of cases of seller’s remorse.
“You get into a deal and it’s like, everything they said they were going to do for us, they’re not doing,” Slabach said.
Take Sharon Regional Medical Center. Steward Health Care acquired the Mercer County hospital in 2017. Eight years later, the hospital shuttered as the for-profit system collapsed under the weight of its debt-fueled expansion spree (it reopened in March under new ownership).
Acquisitions can go south when the parent organization starts cutting services at its smaller subsidiaries, rural health experts warn. Patients are forced to travel farther for health care, and communities suffer as positions at the hospital disappear.
“One of the things we worry about is if the small rural hospital ceases to be a good feeder to the tertiary care facility or begins to become more expensive to operate, the health system may decide they need to close or significantly curtail services that are provided there,” said Lisa Davis, director of the Pennsylvania Office of Rural Health at Penn State University.
Wright said his system avoids these pitfalls, with all hospitals that join offering more services than before and most adding employees. The facilities typically retain their administrative staff — though their roles may change — while hiring more doctors and nurses.
All Independence employees in good standing will be retained for at least a year, according to Skoloda.
Data from the Centers for Medicare and Medicaid Services backs up Wright’s claims. They show a nearly 20% increase in staff levels across hospitals bought by WVU Health System between 2011 and 2022, the years for which data is available.
WVU Health System says it has increased the workforce at Uniontown Hospital from nearly 900 to more than 1,100 employees. The Fayette County facility also has added centers to treat cancer, stroke, and orthopedic conditions as well as a birthing center.
Labor relations have been smooth, too.
“I’ve had a good rapport with them since they came in,” said Vito Dragone Jr., secretary-treasurer of the Teamsters local representing various attendants, clerks and assistants at Uniontown Hospital. “They didn’t come in there wanting to reduce benefits and stuff, and every time we came to the table, we negotiated things that worked out for both of us.”
Competition
At more than 3,400 beds, over 35,000 employees and nearly $7 billion in annual revenue, WVU Health System falls somewhere in health care’s upper middle class.
It’s the top dog in West Virginia, where its primary competitor is Charleston-based Vandalia Health. That 17-hospital network was created in 2022 by merging Charleston Area Medical Center and Mon Health System and, later, one-time WVU Health System subsidiary Davis Health System.
In terms of beds, employees and revenue, WVU Health System will become the second-largest hospital network with a substantial presence in Western Pennsylvania. UPMC, with its 40 hospitals, dwarfs local competition by almost any commonly used metric.
The new No. 3, through this lens, is 14-hospital Allegheny Health Network. But Lou Baverso, AHN’s chief operating officer, asserted his organization has not been surpassed in quality by WVU Health System, pointing to its superior trauma, cardiovascular and neonatal care.
“These hospitals have very different capabilities than AHN,” Baverso said. “If you look at it at a clinical perspective and not a bed-count perspective, I think it leaves us in that No. 2 spot.”
WVU Health System is overmatched by its two main Western Pennsylvania competitors when it comes to their integrated health insurance plans.
Peak Health, a five-year-old insurance firm co-owned by the Morgantown system, is still revving up. By contrast, health plans from UPMC and Highmark — the parent organization of Allegheny Health Network — had operating revenues last year of $16 billion and $22 billion, respectively.
Insurance aside, there’s no denying Independence’s sale will shake up health care in the region if it passes muster with regulators. That’s a good thing, according to Pennsylvania Rep. Arvind Venkat, a McCandless Democrat and emergency room physician at Allegheny Health Network.
“We want more health care options in Pennsylvania and Western Pennsylvania, and we want to see the health care system competing on cost and access and quality,” Venkat said. “If (the sale) creates those circumstances, obviously I’ll still be supportive.”
Wright said there’s no target size for his system, but he remains open to expansion opportunities, including in Pennsylvania. The goal is to remain large enough to be a “regionally headquartered health care system,” he said, as opposed to a subsidiary of some mega-network.
The pull of expansion can be strong.
“I think any time you’re growing, it feels good,” said Edmond, the WVU Health System chief medical officer. “There’s a lot of positive energy that comes with that.”