West Penn bottom line takes hit

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The two highest-paid staff members at the West Penn Allegheny Health System in 2008 were both former employees.

Severance payments boosted former Allegheny General Hospital president and CEO Connie Cibrone's compensation to $1.534 million, including $987,918 in severance, according to tax documents released Monday. She resigned Dec. 31, 2008.

And James Rosenberg, the chief operating officer for WPAHS who left in May 2008, received $1.498 million, which included $410,376 in severance.

Current WPAHS president and CEO Christopher Olivia, who took the reins of the region's second-largest health system in late March of 2008, received $1.098 million in salary and benefits during the remainder of that year. His compensation included $784,547 in base compensation and $200,000 in bonuses and incentive compensation.

The health system would not disclose what prompted the bonus/incentive payment.

Dr. Olivia's predecessor, Jerry Fedele, received $856,712 in 2008, which included $580,295 in severance.

Other high earners when salary, deferred compensation and nontaxable benefits are included were physicians John Lister, $901,818; Venkatraman Srinivasan, $823,315; and Robert Mendicino, $800,417.

West Penn and AGH, the flagship hospitals for WPAHS, saw their net assets drop from a negative $13.93 million at the beginning of the 2008-09 fiscal year, to negative $120.44 million 12 months later, according to the tax documents that covered AGH including AGH Suburban Campus, West Penn and Forbes. Other hospitals in the system filed separately.

The documents show that the biggest hit came in a category called "other liabilities," which grew from $120.13 million at the beginning of fiscal 2009, to $197.99 million a year later. That includes $151.66 million in accrued pension liability. While an eye-catching number, the pension liability should not affect WPAHS' cash flow or ability to operate, said local hospital consultant Jan Jennings, president and CEO of American Healthcare Solutions, Downtown.

"Unfortunately, a lot of great hospitals, large and small, are struggling with this issue."

WPAHS spokeswoman Kelly Sorice said the liabilities "were no surprise to us, and we have budgeted appropriately to meet them."

Following a restructuring of their pension plan, "we are well positioned to meet our pension obligations," she said. "We have never missed a pension payment, and we never plan to."

Operationally, the hospitals lost $10.46 million, compared with the $39.28 million loss the year before. While an improvement, Mr. Jennings said, "it's like going from acute leukemia to chronic leukemia" and he believes that WPAHS is "going to have to make dramatic changes" to stay competitive.

Just last week, WPAHS announced it was closing the emergency department and inpatient services at the AGH Suburban campus in Belleuve, and Mr. Jennings said it would need to take additional steps to cut the losses.

The West Penn Allegheny Health System currently includes West Penn in Bloomfield, the West Penn Forbes Campus in Monroeville, Allegheny General on North Side, Canonsburg General Hospital in Washington County and Allegheny Valley Hospital in Natrona Heights.

"Allegheny General Hospital is the crown jewel of the system, and this [financial] bleeding adversely affects their ability" to keep up with the latest technology, Mr. Jennings said. "You have to stay vibrant in order to be successful in a competitive market such as Pittsburgh."

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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