Faced with an elderly patient base that is shrinking in number, increased demand to care for those without insurance and uncertain government funding, steering a major health system through a major consolidation must feel like trying to repair a roof in a tornado.
But, coming off an $89.9 million operating loss last year, West Penn Allegheny Health System president CEO Christopher Olivia believes that he had little choice.
The Allegheny General Hospital Suburban campus in Bellevue and West Penn Hospital in Bloomfield were filling only 40 percent of their beds. "You can't charge enough to make up for the lack of volume," he told the Pittsburgh Technology Council audience on Thursday at the Rivers Club, Downtown.
Most services at those hospitals have either closed, or are about to close, with many of West Penn's major services moving to Allegheny General Hospital beginning in January.
With these and other restructuring moves, WPAHS "is becoming more financially stable," Dr. Olivia said.
But those efforts come against a backdrop of epic changes in health care, changes that will increase the numbers of insured but also the number of people eligible for Medicaid, which reimburses below costs. "We will have to care for more people with less dollars."
This week, the health system reported a $3.6 million operating loss for the July-September period (last year's losses included a one-time $70.7 million asset impairment charge) and also learned that a federal appeals judge had revived its lawsuit against rival University of Pittsburgh Medical Center and insurer Highmark whom West Penn accused of conspiring to limit local competition.
Dr. Olivia said he could not address the specifics of the case, on the advice of WPAHS attorneys, but emphasized the importance of competition in keeping health-care costs in line. "Here you have just two systems, and you need to have an option because health care costs are high here."
The Greater Pittsburgh and Allegheny County area has about 400,000 people without health insurance, he said.
The increasing number of senior citizens (Dr. Olivia said he sometimes refers to Allegheny County as "God's waiting room") and the growing number of health problems related to obesity add to the demand on health-care systems while, at the same time, deficits at both the federal and state levels make the prospects for more funding cuts all too real.
Currently, Dr. Olivia said, "The curve of government spending is unsustainable."
Steve Twedt: firstname.lastname@example.org or 412-263-1963.