PITTSBURGH (KDKA) – Officials with the West Penn Allegheny Health System and Highmark have formally announced a deal in which the insurer will take over the hospital network.

Top officials with both entities announced that they inked the deal on Monday. Essentially, the deal is Highmark’s acquisition of a financially troubled hospital system.

The $475 million deal to take over the six-hospital system, is a much-needed financial boost for West Penn.

However, Highmark’s entry into the healthcare provider business has angered rival UPMC, which said its facilities will no longer be available to Highmark customers in 2013.

That has brought the attention of state legislators to this issue.

On Tuesday, Highmark CEO Dr. Ken Melani stressed that residents in this area deserved to have the choice of another viable hospital system.

“At a time when our population is aging and the need for healthcare services is on the rise, we’re kind of in a critical stage here in western [Pennsylvania], facing shortages with physicians and other healthcare workers, overcrowded emergency rooms and healthcare costs that are becoming even more unaffordable. In these times, it’s vitally important to have a healthcare system that provides a choice and a healthy level of competition for people in our communities, who are seeking high quality affordable healthcare services. With that in mind, this affiliation will bring with it a unique opportunity to change the way healthcare is delivered in western Pennsylvania,” Dr. Melani said.

Highmark said it hopes to reinstate essential services at West Penn Hospital, including reopening the emergency room that was closed last January.

The acquisition still requires the approval of the Pennsylvania Insurance Department, the state attorney general, and the Internal Revenue Service.

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