Top pay went to former executives at West Penn Allegheny Health System

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Christopher Olivia, who stepped down as West Penn Allegheny Health System president and CEO two years ago, was nevertheless the health system's highest compensated employee in the fiscal year ending June 30, 2012, newly released tax documents show.

Dr. Olivia received just under $678,000 in base compensation and $2.5 million in bonus and incentive pay, which combined with retirement and other benefits, brought his total compensation to just over $6 million.

He resigned in June 2011 after Highmark and WPAHS announced plans to affiliate.

Salary disclosure forms also show West Penn Allegheny's second highest earner was another former executive, Roy Santarella, who left as chief administrative officer in November 2011. His total compensation for the fiscal 2012 was $2.29 million.

In all, West Penn Allegheny paid out more than $3 million in severance to 13 former executives, including a $625,000 payment to Dr. Olivia.

While some may question the large amounts paid to former executives, "It's kind of the nature of this type of situation where you have to pay people to stay," said employee benefits consultant James McTiernan of Triad, USA, Downtown. "It could well be the exact right thing to do, despite how it looks after the fact."

The IRS requires nonprofit organizations to file and make publicly available certain financial information every year and the West Penn Allegheny filing depicts a health system in deep financial trouble, with $1.05 billion in assets and $1.34 billion in liabilities. By the end of June 2012, WPAHS had a net fund balance of negative $292 million.

Meanwhile, the health system's physician specialist network, Allegheny Specialty Practice Network, reported a net fund balance of negative $59.2 million as of June 30, 2012.

The numbers are no surprise given the health system's widely-reported struggles the past five years, but they do underscore its steep downward arc before Highmark committed $475 million to stabilize the region's second largest health provider.

The number of former executives still showing up among the highest-compensated employees also points to ongoing turmoil in leadership. Following Dr. Olivia's departure, a consultant team headed by Keith Ghezzi oversaw the health system during the transition to becoming the centerpiece of Highmark's newly christened Allegheny Health Network headed by John Paul.

West Penn Allegheny officials on Tuesday declined to comment on the tax filing.

businessnews - health

Steve Twedt: or 412-263-1963.


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