Losses continue to mount at WPAHS

Losses continued to mount at West Penn Allegheny Health System for the three-month period ending December 31, with the ailing system on track to lose more than $100 million during the current fiscal year.

The hospital network reported an operating loss of $37 million for the quarter, a swing from a $116,000 gain for the same period in 2010, according to financial results released on Thursday. Investment income, gifts and other sources of revenue eased the total loss for the quarter to $34 million, compared to a loss of 1.4 million during the same period in 2010.

Restructuring costs totaling $6.6 million were incurred for the six-month period ending Dec. 31, “primarily related to severance costs associated with changes in leadership,” according to the filing. A number of executives and doctors have left the system as the network has struggled to regain its footing.

Dr. Keith Ghezzi, for example, is the fifth person to lead the system since 2007, and he is an interim appointment.

For the first half of the fiscal year, WPAHS had an operating loss of $64 million, an increase from the $13 million loss reported for the same period in 2010. That compares to a loss of $55.9 million considering gifts, donations and other miscellaneous sources of revenue, an increase from the $2.1 million gain for the same period in 2010.

Health insurer Highmark Inc. is in the process of acquiring WPAHS, a deal that has been undergoing regulatory review. Highmark used the release of WPAHS’s financials to urge a quick review.

“The latest financial results from WPAHS show once again the need for expedited approval of this transaction from state regulators,” Highmark said in a statement issued Thursday. “Highmark remains fully committed to the affiliation and the sooner approvals are received, the sooner we will be able to work to further strengthen WPAHS and provide the people of western Pennsylvania with continued access to a world class health system.”

Highmark President and CEO Dr. Ken Melani, in announcing the insurer’s affiliation with Monroeville-based Premier Medical Associates in January, was asked how long WPAHS could continue to sustain losses. “As long as we want it to,” he said.