Penn State Board approves Pinnacle, Hershey Medical Center merger

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The PinnacleHealth System board of directors voted earlier in the week to approve the plan. The transaction must be approved by the state Attorney General’s office and the Federal Trade Commission before it can proceed.


Barring any impediments, Harrisburg-based Pinnacle will become an affiliate of Derry Township-based Penn State Health, which includes the Hershey Medical Center; Penn State Hershey Children’s Hospital, cancer institute and medical group; the Penn State Hershey Health System and its associated entities; and Saint Joseph’s Regional Health Network of Reading.


Under the proposed structure, Dr. A. Craig Hillemeier, dean of the Penn State College of Medicine, CEO of the Medical Center and Penn State’s senior vice president for health affairs, will oversee the new enterprise as CEO. Michael Young, president and CEO of PinnacleHealth, will serve as president and COO.


“This new health enterprise is a win for our patients, students, researchers and central Pennsylvania communities because we can offer our academic expertise and advanced care to a broader patient population,” Hillemeier said. “PinnacleHealth and Penn State Hershey see this new health care enterprise through the same lens — that our longstanding individual commitments to quality and safety, combined into one health system, would give us the scale we need to continue to improve outcomes and reverse the trend of growing health care costs.”


Young said the proposed system “has embraced the challenge to achieve the ‘triple aim’ of health reform: continually improve quality of care, increase access to care, and lower cost of care. Our goal is to create a healthcare system focused on community needs and innovative solutions for the future of healthcare. By integrating expert clinical research capabilities, superior inpatient and outpatient care, the latest technological advancements and medical education and training, together we are positioned to provide a healthcare destination that promotes wellness and provides groundbreaking medicine.”


The trustees also approved a new eight-member board of directors for Penn State Health, which will include Hillemeier, Dennis P. Brenckle, Peter N. Carlino, Kathleen L. Casey, Mark H. Dambly, Rodney A. Erickson, David J. Gray and Keith E. Masser. Of those, Casey is the only one not currently on the Penn State Hershey Health System board.


The board’s size is expected to grow to 16 when the merger is finalized, with eight members each from Pinnacle and Hershey. The new board chairman will be drawn from the PinnacleHealth System board.


Formal discussions to expand collaboration between the two health systems began in November 2013. Last September, the Hershey Medical Center formed Penn State Health as a nonprofit to facilitate the merger. The board’s Committee on Finance, Business and Capital Planning recommended final approval of the merger last January.