Major cutbacks ahead at West Penn Hospital

Officials plan to lay off 1,500 workers, close emergency department to stem losses

A decade after West Penn Hospital saved Allegheny General Hospital following the bankruptcy of its parent corporation, AGH has emerged as the dominant entity for the region's second-largest health care system.

On Tuesday, West Penn Allegheny Health System officials announced that up to 1,500 full- and part-time employees will lose their jobs by January 2011, and that nearly all of them work at West Penn's Bloomfield campus.

Also, West Penn's emergency department will close at year's end.

The moves are part of the health system's consolidation of services at West Penn and AGH.

The job cuts at West Penn will be "across the board," including clinical staff, said WPAHS spokeswoman Kelly Sorice. West Penn employs 2,412 people, out of the system's 13,000 employees.

"Where are people going to go to the hospital at?" asked Tammy Hess, 51, of Bloomfield, as she walked by West Penn on Tuesday. She said she does not own a car and, after having parts of her lungs removed because of cancer, UPMC Shadyside "is a long walk" for her. "They didn't think about the elderly, the car-less."

WPAHS President and CEO Christopher T. Olivia said the move to consolidate services comes after a two-year effort to stem operational losses in the health system. Those efforts have resulted in $100 million in operating improvements, he said.

Through the first three quarters of the current fiscal year, WPAHS recorded a $7.2 million net profit, but an $11.6 million operating loss. Shortly after those results were announced, Moody's Investors Service downgraded the WPAHS bond rating from Ba3 to B1 based on its operating performance and pension obligations. A few days later, Standard & Poor's also downgraded the WPAHS rating on the $758 million of series 2007 bonds from BB to BB- with a stable outlook.

Dr. Olivia, who faced an unexpected $73 million write down shortly after he took the helm of WPAHS two years ago largely due to an overestimation of patient revenue, said the consolidation is as much a move to address what's coming as what's already occurred.

Facing decreased reimbursements and inpatient volumes, a struggling economy and health-care reform requirements, he said the health system had to act.

"While we're stable today, we're not secure for the future," he said Tuesday.

Under the consolidation plan, West Penn will remain home to WPAHS obstetrical deliveries and the neonatal ICU, bariatric surgery, the burn unit, and inpatient rehabilitation services, as well as ancillary services to support those programs.

WPAHS officials said West Penn's daily average of about 240 patients represents 47 percent of its capacity. After the consolidation, West Penn's 505 licensed beds will be reduced to 202 beds.

AGH, meanwhile, will have oncology, the neurosciences, critical care, orthopedics and cardiovascular care, with plans for expanding its emergency department.

"We believe this is the option that will maintain the system's viability," said WPAHS board Chairman David McClenahan. "If we don't take these necessary steps, patients in Pittsburgh will have no choice where they receive their health care" other than the University of Pittsburgh Medical Center.

State Sen. Jim Ferlo, whose district includes Bloomfield, called the consolidation "obviously devastating for the employees who will lose their jobs" but said West Penn could not continue operating at a loss.

"I think the for-profit nature of the health care industry is somewhat to blame and the fact that we don't have a rational system" for deploying scarce health care resources, he said, citing UPMC's plans to build a hospital near the West Penn Forbes Regional Campus in Monroeville.

"Does anybody really consider UPMC as a nonprofit institution with their tentacles extended all around the world?" he asked.

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.

Meanwhile, WPAHS has announced plans to open an ambulatory care center in Peters in the next 18 months. It also plans to expand its Canonsburg General and Alle-Kiski hospitals, and West Penn Hospital Forbes Regional Campus in Monroeville 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 loss of up to 1,500 workers within the West Penn Allegheny Health System will rank among the largest single layoffs locally since the steel industry began shedding jobs in the 1980s.

By contrast, the Sony plant in Westmoreland County at one point employed more than 3,000 workers in the late 1990s, but that number was down to 1,500 by 2007, then 560 workers when it closed in 2008.

Late Tuesday, city and Allegheny County officials in conjunction with the Three Rivers Workforce Investment Board requested $500,000 in funding from the state Labor and Industry's Bureau of Workforce Development Partnership to aid displaced WPAHS workers.

WPAHS officials will attend a town hall meeting to discuss the consolidation plan at 7 tonight at the Immaculate Conception School auditorium, Edmond Street in Bloomfield.

Steve Twedt: or 412-263-1963. First Published June 30, 2010 4:00 AM


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