A Pennsylvania health insurance company is amassing commercial real estate property in the western part of the state, trying to acquire enough lands to open facilities to serve its new $1 billion health-care system, according to reports.

The insurer has used shell companies to buy $32 million in vacant land and other property in five municipalities near Pittsburgh. It wants to lure patients away from the region’s dominant health system and into a less-popular hospital network the insurer intends to buy. The pending $475 million deal is waiting for state approval as the insurer continues expansion plans.

Still the insurer has not commented on what it plans to do with the properties. Experts have said that increasing patient volume is crucial to turning around the struggling hospital system.

Therefore, that has led some to question whether the insurer is trying to raise the cost of health care by adding hospital beds and equipment to the area. A report from the Congressional Budget office in 2008 said that the more beds that are available, the more likely doctors are to recommend a patient fill one of them.

A published report said that the insurer has used an attorney to form more than 10 shell companies to acquire property. It already has said it will have 10 outpatient centers throughout the area and likely has the funds to do it. It reportedly has $4.1 billion in reserves.

Among the purchases by the shell company are a pair of properties in a commercial area, a former animal hospital property and a wooded lot of nearly 5 acres. Some of the properties are nearby to the clinics and medical centers operated by the existing health-care system.

Pennsylvania is not among the states to require health-care companies to apply for a “certificate of need” to build health-care facilities or buy major equipment.

The health-care company’s acquisitions, thus far, seem to meet all laws regarding the purchase of property for medical use. Shell companies are not illegal.

Source: Tribune-Review, “Highmark shells out $32M to amass property,” Alex Nixon, July 19, 2012