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Allegheny Health Network deal to create Pittsburgh region’s second-largest home health, hospice provider

Allegheny Health Network is merging its hospice and home health operations into a for-profit joint venture company in a deal creating the second-largest provider in Western Pennsylvania, behind rival UPMC.

Allegheny Health, the nonprofit hospital system owned by Highmark Health, said it will own 60 percent of the venture, which isn’t named but will operate under the Allegheny Health Network brand. Forty percent will be owned by Celtic Healthcare Inc., which will manage the company.

The companies declined to disclose the value of the deal, expected to close by Jan. 1.

Mars-based Celtic is a subsidiary of Graham Holdings Co., a media and education company that last year sold The Washington Post newspaper to Amazon.com CEO founder Jeff Bezos for $250 million.

Allegheny Health is merging to grow its home health and hospice operations, which don’t have the size to meet demand from patients who use the seven-hospital network, said Brian Holzer, senior vice president of diversified services.

“Last year, we were barely able to service 50 percent of the patients discharged from our own hospitals” who needed home care or hospice, Holzer said.

Celtic is merging its hospice and home care operations only in Western Pennsylvania into the company. Celtic also runs services in Central and Northeast Pennsylvania, Maryland, Missouri and Illinois.

Graham purchased Celtic in 2012 and has expanded it through acquisitions in the home health and hospice industries for the past year.

In April, Celtic bought VNA-TIP Healthcare, a home health and hospice company in Missouri and Illinois. In July, it acquired an 80 percent interest in Residential Healthcare Group Inc., a provider of home health and hospice services in Michigan and Illinois. It did not disclose the value of those deals.

The joint venture company will serve about 300 hospice and 1,500 home health patients, said Arnie Burchianti, CEO of Celtic.

“This partnership will allow Celtic to fulfill our ultimate mission to serve more patients in the comfort of their home,” he said.

UPMC is the biggest provider of home care and hospice services in Western Pennsylvania through two affiliated organizations. Family Hospice and Palliative Care, of Mt. Lebanon, partnered with UPMC in 2011 to provide hospice to patients of the region’s largest hospital system. It treats about 3,600 patients.

UPMC Visiting Nursing Association is the biggest home care organization in the region, serving about 4,900 patients.

Celtic’s 175 workers in the region and Allegheny Health’s 200 home care and hospice employees are expected to move to the joint venture, Holzer said.

Once the deal is complete, two offices from which Allegheny Health’s hospice and home care operations are managed along with four Celtic offices will be consolidated into one location, Burchianti said.

Holzer said no decision has been made about whether the joint venture will keep an inpatient hospice unit at West Penn Hospital in Bloomfield. The new company may consider additional sites for inpatient hospice care.

“We anticipate significant growth early in 2015,” he said.

Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or [email protected].


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