03/27/2012 11:56 am ET Updated Mar 28, 2012

Health Care Reform in the Balance As Insurance Company and Hospital Chain Battle in Pittsburgh

A nasty fight between two health-care companies is brewing in Pittsburgh with one company CEO going so far as to accuse his rival of trying to "rape" the local hospital market. The battle between nonprofit health insurer Highmark and the University of Pittsburgh Medical Center, the region's dominant health system, sheds light on the growing pains accompanying the transformation of the U.S. health care system.

Highmark and the University of Pittsburgh Medical Center are maneuvering to seize greater control over the local health care market, leaving patients in the community hanging in the balance, reports the Wall Street Journal. There are 2.7 million Highmark customers who won't have access to UPMC facilities unless the two sides come to an agreement before June 2013, according to the Journal.

The companies have engaged in lawsuits, lobbied state officials, and run ad campaigns attacking each other. A lowlight occurred after a Pennsylvania Senate hearing last September, when Highmark CEO Kenneth Melani let his temper get the better of him and lashed out at University of Pittsburgh Medical Center CEO Jeffrey Romoff. "He is trying to rape the commercial marketplace to build his empire," Melani, said, according to the Pittsburgh Tribune-Review.

These heavyweights are encroaching more and more on each other's territory. The University of Pittsburgh Medical Center is a $9 billion-a-year company that owns 19 hospitals, employs 3,240 doctors, and has its own insurance business, the Journal reports. Highmark covers 60 percent of the people with insurance in Allegheny County and is seeking government approval to acquire the West-Penn Allegheny Health System, another local hospital chain. Highmark has also been buying up physician practices and opening its own clinics.

With their interests in greater conflict, Highmark and the University of Pittsburgh Medical Center have waged a nasty public fight over their failure to renew a deal, which expires in June 2013, that currently lets Highmark customers receive treatments at the chain's hospitals at the insurer's discounted rates.

There's more at play in these two companies' bids to takeover Pittsburgh that just the usual forces of competition. Private sector health care companies, weighed down by skyrocketing health care costs and spurred by health care reform to change how they do business, are trying to transform themselves. The health care reform law enacted two years ago pushes health insurance companies, hospitals, physicians, and other medical providers to integrate their activities more so that patients receive higher quality, less wasteful care. The target is better health and lower costs.

While Obama's health care reform law encourages the players in the health care system to collaborate more, antitrust regulators are warning that consolidation in the health care industry could be bad for consumers. Bigger, more integrated companies with more market power could raise prices, as has happened in the past.

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