WPAHS draws 2nd-quarter loss

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In the middle of a major restructuring and facing declining patient revenues, the West Penn Allegheny Health System recorded an operating loss of $23.2 million and a net loss of $1.4 million in the last three months of 2010, according to financial results released Friday.

That compares with a $4 million operating loss and $2.7 million profit for the same period a year earlier. Health system officials attributed $9 million of the loss to restructuring costs.

"We are in a transitional period where we are seeing lower inpatient-associated revenues yet the higher expenses of running a bricks-and-mortar-based system structured around a greater number of inpatient beds," said West Penn President and CEO Christopher Olivia in a news release.

"We are continuing to execute a restructuring plan to address this. We expect our results to improve when we have fully implemented our new, more efficient model of health care delivery."

During the October-December period, WPAHS moved several services from West Penn Hospital in Bloomfield to Allegheny General Hospital on North Side, closing the West Penn emergency department in the process.

As a result of the restructuring, the health system reports that its cash on hand has decreased from 64.6 days worth in December 2009 to 50.7 days a year later.

As of Dec. 31, which marks the halfway point in West Penn's fiscal year, the health system had an operating loss of $26.8 million over six months but a net profit of $2.1 million, due in part to a $9.6 million gain for the sale of the system's outpatient dialysis centers.

Inpatient discharges, meanwhile, fell 13.2 percent from the previous year, which translated to a $31.1 million decrease in patient revenue compared with the last six months of 2009.

WPAHS officials attribute the drop to downsizing at West Penn and the AGH Suburban campus in Bellevue, the general decline in the economy and the trend toward more hospital visits being classified as "observations" rather than "admissions."

Correction/Clarification: (Published March 1, 2011) The West Penn Allegheny Health System had a $23.2 million operating loss in the last three months of 2010, which is the second quarter of the system's fiscal year. A headline Saturday incorrectly identified which quarter the loss occurred.

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


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