West Penn Allegheny Health System officials did not post a required audited financial report for fiscal year 2012 that was due Thursday, which now means the region's second-largest health system must post that information in 30 days or be in default on its $726 million Series 2007 bond offering.
It is widely expected that WPAHS and insurer Highmark Inc. will negotiate a financial restructuring with bondholders in that time -- a restructuring that may or may not include a formal bankruptcy filing.
WPAHS issued a short statement Friday afternoon that said, "As of the time of this filing, audited financial statements of the System are not available, but the System intends to continue to work with its independent auditors to finalize the same."
Despite not releasing an audited statement, West Penn Allegheny's dire financial straits are no secret. In its unaudited financial disclosure released Oct. 29, the health system reported a $112.5 million operating loss for fiscal 2012 ending June 30 and a net $37.8 million loss for the year, even after financial support from Highmark helped WPAHS realize a $40.7 million profit in the April to June fourth quarter.
In last year's audited report, accounting firm KPMG said the health system's ongoing losses in operating revenue and patient volume "raise substantial doubt about WPAHS' ability to continue as a going concern." Major ratings firms such as Moody's, Standard & Poor's and Fitch now rate WPAHS bonds as high-risk, junk bonds.
Highmark is seeking approval from the Pennsylvania Insurance Department to affiliate with West Penn Allegheny as the insurer develops its own regional integrated health care delivery system to compete with UPMC.
Steve Twedt: firstname.lastname@example.org or 412-263-1963.