After some debate and speculation, UPMC's planned takeover of the Washington Health System has cleared an important hurdle.

Pennsylvania Attorney General Michelle Henry signed the deal this week.

UPMC first announced plans to acquire Washington Health System last June, but union leaders have opposed the deal. The western Pennsylvania-based Washington system has said it is losing millions of dollars and that the merger with UPMC is critical to the organization's survival.

In her statement announcing her approval of the agreement, Henry cited concerns about maintaining access to health care in the region.

“This transaction will keep Washington Hospital open and serving thousands of Pennsylvania residents,” Henry said in a statement. “It is important that the transaction advances the interests of patients, hospital employees and the community. My office conducted a comprehensive review and entered into this agreement with UPMC and Washington Health Care Services to ensure these protections are in place.”

Under the agreement, the Washington Health System would be renamed UPMC Washington, but would have to negotiate with all interested health insurers, the attorney general's office said.

The office also said Washington is prohibited from using “exclusive contracts and all-or-nothing clauses” in its new contracts with health insurers. Washington cannot prevent an insurer from contracting with other health care providers. The attorney general's office said these provisions would ensure that insureds get cheaper, in-network access to Washington's doctors.

Washington Health System welcomed the Attorney General's approval.

“WHS looks forward to the next steps in finalizing this partnership that will secure health care and jobs in our community,” Washington said in a statement.

According to the system, the deal is still awaiting approval from the Federal Trade Commission.

UPMC operates 40 hospitals and 800 other health care facilities. Washington Health System operates its flagship 278-bed Washington Hospital in Washington, Pennsylvania, as well as a 49-bed hospital in rural Waynesburg, Pennsylvania.

SEIU Healthcare Pennsylvania has consistently raised concerns about the deal. In an opinion piece last September, the group expressed fears that union members would face pay cuts and also noted that UPMC would cut benefits elsewhere.

In a statement to the British newspaper Observer-Reporter, SEIU members said the agreement with the attorney general provided some important protections, but it should also have included more explicit provisions to ensure that no jobs would be cut or benefits eliminated.

The Washington system said bluntly that the organization might have to give up its work if the deal did not go through.

An online FAQ stated: “WHS has a $30 million budget deficit as of 2022. If we do not take action, WHS could be forced to spend the next two to three years cutting services and cutting costs before facing the inevitable. That means potentially 2,700 local employees out of jobs and a loss of the essential health and medical services this community needs.”

In April, Pennsylvania lawmakers and Washington staffers gathered at the Capitol in Harrisburg to demand support for the deal. “Political bickering and petty arguments have found a way to jeopardize this important merger,” Tim O'Neal, a Republican from Washington, said at the rally.

JoJo Burgess, the Democratic mayor of Washington, said in April: “We must save an iconic rural hospital in southwestern Pennsylvania. We risk leaving nearly 300,000 people without health care and having to drive to Pittsburgh to get their own care.”

Washington said UPMC has pledged to maintain services for area residents.

“UPMC is committed to preserving the long-term health and vitality of WHS and the communities it serves for many years to come,” Washington said.

The hospital industry has seen an increase in mergers and acquisitions over the past 18 months, and according to Kaufman Hall, a healthcare consulting firm, financial distress is a driving factor in some of these deals. There were 65 hospital deals announced in 2023, up from 53 deals in 2022.

Hospital analysts expect there to be more deals in the future, some of which will involve hospitals looking for partners to stay afloat.