WPAHS presses plans to expand

That despite serious financial questions

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The West Penn Allegheny Health System is opening an ambulatory care center in Peters in the next 18 months, it has expansion plans at Canonsburg General and Alle-Kiski hospitals, and officials Tuesday announced additional emergency department beds would be coming to West Penn's Forbes Regional Campus in Monroeville.

It doesn't sound like a health system that last week reported net profit of $200,000 last quarter, but an operating loss of $5.2 million.

In that same week, Moody's Investors Service issued a dark analysis of West Penn Allegheny's finances, downgrading the health system's already-junk bond rating further and forecasting impending problems making budget projections and meeting pension payment obligations. The system's financial operations, while improving, haven't shown a profit in five years.

Yet West Penn Allegheny spokeswoman Kelly Sorice says the system is moving ahead with restructuring and consolidation plans, and that it fully intends to be able to meet its financial obligations.

West Penn Hospital Forbes Regional Campus will expand its emergency department from 29 to 38 beds as part of a $1 million project that will add nine new treatment rooms.

The expansion is expected be completed by December.

The next consolidation initiative will bring West Penn's neuroscience department to Allegheny General Hospital, a move likely to fuel more speculation about the future of West Penn Hospital as the Bloomfield facility seems increasingly to be taking a back seat to Allegheny General.

West Penn has become the home for the health system's obstetrics services, bariatric surgery and the Joslin diabetes programs, and still has its highly regarded burn unit.

But the loss of its neurosurgical programs to AGH and West Penn's proximity to UPMC Shadyside is bound to raise questions about its future.

Ms. Sorice called "unfounded" rumors that West Penn eventually will be converted to all behavioral health, but she also did not reveal what specific plans the health system has for West Penn and its other campuses.

Hospital industry analyst Sheryl Skolnick of CRT Capital in Stamford, Conn., said West Penn Allegheny's ratings downgrade was not good news "but I'm not sure it has any practical implications" because even highly rated entities are having trouble raising capital in this down economy.

"There's not a lot of liquidity to begin with," she said. "So if you need to refinance, you're stuck," regardless of the bond rating.

While West Penn's current financial picture is fragile -- it has one of the lowest ratings Moody's has given any of the 500-plus hospitals rated nationwide -- hospitals everywhere are feeling the pinch and Moody's in January said it had a negative outlook for the entire industry.

Earlier this year, WPAHS officials announced that the AGH Suburban Campus in Bellevue would close its emergency room and inpatient care in favor of an urgent care center.

That change will take place Aug. 12-13.

"Consolidating programs helps our cost structure and also enables us to better align our capacity in the city to meet our patients' needs," said Ms. Sorice.

Systemwide, "We're really starting to move toward more of an outpatient model because that's the way the industry is going."

Ms. Skolnick, who noted that she had not analyzed West Penn Allegheny's finances in detail, said the consolidation and restructuring was a "classic" approach for a financially stressed health system.

The Moody's report said the West Penn Allegheny Health System restructuring might not be fully implemented for 18 months.

Ms. Skolnick said the health system "should consider a more accelerated pace."

But even the downgrade to B1 from Ba3 "doesn't necessarily mean that a hospital will close," she said, adding that, "until that happens, there is always a chance to prevent it."

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


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