Olivia declares WPAHS 'stable'

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One year after absorbing a $73 million write-down, President and CEO Christopher Olivia says the West Penn Allegheny Health System is "financially stable" and that he remains "very optimistic" about its future, even as the system undergoes significant changes.

Speaking to local media in a wide-ranging discussion yesterday, Dr. Olivia said the hospital system planned to move more complex services -- he did not specify which ones -- from West Penn Hospital in Bloomfield to Allegheny General Hospital on North Side as part of the effort to reduce duplication at the two campuses.

But he also wants to maintain inpatient services at West Penn "if we can find a model to make it work."

On Friday, WPAHS released its annual report that showed a net loss of $25.2 million in the fiscal year ending June 30, but a $2.1 million net profit in the fourth quarter. Dr. Olivia said he was hopeful that those fourth quarter results will signal a move to overall profitability.

"We're not where we need to be, but we've made a lot of progress in the last year, year-and-a-half. The people have really pulled together here."

Already, he said, WPAHS has found approximately $110 million in "financial improvements," with nearly 80 percent of that coming by reducing expenses through renegotiated vendor contracts and changes in the system's benefits structures. About $40 million in savings and revenue enhancements is reflected in the newly released annual report, with the remainder expected to show up next year.

The writedown in 2008, leading to a $57.8 million loss for the year, was necessary because the health system's previous administration had overestimated patient revenues.

While there have been layoffs, Dr. Olivia said the hospital system has avoided cuts among bedside personnel "because that's what we're about."

Also last week, U.S. District Judge Arthur Schwab dismissed an antitrust suit West Penn Allegheny had filed against the University of Pittsburgh Medical Center and Highmark that alleged the two had conspired to put WPAHS out of business. Dr. Olivia said no decision had been made whether to appeal that decision, but that the unfavorable ruling did not pose a financial threat.

"Our turnaround is predicated on us reconfiguring our organization, and we have made a lot of progress on that. It is not predicated on a lawsuit," he said.

But he did take a verbal shot at UPMC's plan to build a hospital in Monroeville, near West Penn's Forbes campus. If the impetus for health-care reform is limiting costs and avoiding duplication of services "building a hospital a mile away from another one is not the way to go," he said. "But, then, that's not my decision."

Steve Twedt can be reached at stwedt@post-gazette.com or 412-263-1963.


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