Western Pennsylvania Hospital's new president offered more details yesterday about the initiatives under way to reverse operating losses, cut costs and increase revenues at the region's second-largest medical provider, the 13,000-person West Penn Allegheny Health System.

In an e-mail sent to employees in Bloomfield and Monroeville, Dawn Gideon cited a new "financial improvement project" that would identify ways to "reduce expenses, increase revenues, improve cash flow and tighten management controls." Recommendations to an internal "steering committee" of senior managers are due in early July.

Among the areas under scrutiny are purchasing practices, how the system collects revenue and "productivity and staffing" -- an indication that personnel cuts may be considered.

"Overall labor productivity at each hospital will be examined," Ms. Gideon wrote in her e-mail. She added that "we believe most of the opportunities for financial improvement at West Penn are in enhancing revenue, but we need to make sure that our departments are operating at maximum efficiency."

Assisting West Penn Allegheny with this task is Wellspring Partners, a Chicago-based turnaround consultancy where Ms. Gideon last worked as a managing director before starting her job here in early May. Wellspring has conducted more than 250 interviews with managers across the five-hospital system, according to Ms. Gideon's e-mail.

The architect of this "financial improvement project" is Ms. Gideon's boss, Dr. Christopher Olivia, the new chief executive officer of the West Penn Allegheny Health System. Since starting in late March, Dr. Olivia has shaken up the system by putting a temporary hold on new capital spending, changing top executives and trying to speed up the long-promised consolidation of services and departments.

In a separate e-mail issued Monday, Dr. Olivia told employees to expect "additional changes in the future as we design our management team for accountability, initiate our strategic planning process, reorganize our physician groups and ultimately restructure our hospitals."

West Penn Allegheny, he wrote, "has lost money on operations the last two fiscal years. This cannot and will not continue."

In addition, West Penn Allegheny's hospitals trail many of the hospitals controlled by rival University of Pittsburgh Medical Center in operating profit margins, according to a report issued today by the Pennsylvania Health Care Cost Containment Council. The best performer among UPMC hospitals (and fourth-highest in the state) was Magee-Womens, which earned an operating margin of 17.5 percent. UPMC Passavant ended fiscal 2007 with a 12.2 percent margin; UPMC Mercy was 5.9 percent; Children's Hospital was 5.4 percent; and UPMC Presbyterian/Shadyside was 4.9 percent. UPMC Braddock ended the year with a negative margin of 3.1 percent and UPMC McKeesport was also in the red, with a negative 1.15 percent.

Allegheny General Hospital -- one of West Penn Allegheny's flagships -- earned a negative 1.6 percent in fiscal year 2007, while The Western Pennsylvania Hospital earned a positive 2.96 percent. The highest performer in the West Penn Allegheny system was Forbes Regional, at 7.8 percent, while Alle-Kiski earned 3.3 percent and Canonsburg General ended the year with a negative 1.2 percent.

Among other improvement projects under way at West Penn Allegheny is a strategic planning process, with focus groups volunteering their opinions; consolidation of physician organizations; installation of systemwide department chairs; and recruitment of new physicians to reverse "the decreases in volume that some of our programs are experiencing," Ms. Gideon said in her e-mail yesterday.

Also, by July 1 The Western Pennsylvania Hospital's surgical residency program will be consolidated at Allegheny General Hospital on the North Side. Residents will continue to rotate through West Penn's Bloomfield campus, according to Ms. Gideon, and the Forbes Family Medicine Residency Program will continue to be based at Forbes Regional in Monroeville.