West Penn Allegheny Health System's losses continue to pile up as it awaits state insurance department approval to affiliate with Highmark Inc.
For the first six months of its fiscal year, which ends June 30, the region's second-largest health system reported Friday that it had recorded a $61.4 million operating loss, compared with a $63.9 million operating loss for the same period of the 2011 fiscal year.
Patient revenue was up, $360.6 million for the six months compared with $344.9 million in 2011, but inpatient discharges dropped 3.3 percent, due in part to the opening of the UPMC East hospital in Monroeville near West Penn Allegheny's Forbes Regional Hospital and the classification of more hospital stays as outpatient observations.
Despite the continuing string of losses, "Highmark will eventually be allowed to repair West Penn Allegheny," predicted health care consultant Jan Jennings, president and CEO of the Downtown-based American Healthcare Solutions. "Highmark has $25 billion in cash reserves. I think Highmark is going to have sufficient wallop to save them."
Highmark has made a $475 million commitment to stabilize and strengthen WPAHS. If the Pennsylvania Insurance Department approves the affiliation, Highmark will provide $50 million to West Penn Allegheny and loan the financially troubled health system another $50 million.
An additional grant from Highmark to West Penn Allegheny of up to $75 million -- money originally earmarked for a Pittsburgh-based branch of Temple University School of Medicine -- will be made when the affiliation agreement is formalized. The school initiative has been put on hold.
The WPAHS financial report also notes that, following an internal audit, it notified the U.S. Department of Health and Human Services Inspector General that some leasing agreements it has with independent physicians "potentially violate the federal anti-kickback statute." Spokeswoman Kelly Sorice said the matter relates to expired leases with independent physicians that had not been renewed on time.
In an unrelated matter, West Penn Allegheny last year disclosed that the Securities and Exchange Commission had issued a Wells Notice recommending civil action against WPAHS for alleged violations of SEC disclosure regulations.
Steve Twedt: email@example.com or 412-263-1963.