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Healthcare Business News

S&P changes outlook on West Penn

By Melanie Evans
Posted: July 6, 2011 - 3:00 pm ET

Standard & Poor's said its outlook for West Penn Allegheny Health System, the struggling hospital operator in Pittsburgh that last week announced its possible acquisition by insurer Highmark, has changed to developing from negative.

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Standard & Poor's lowered its speculative credit rating for West Penn Allegheny in May to B+ as the health system has continued to struggle financially. Investors have loaned the system $748 million. Standard & Poor's outlook indicates the possible direction that analysts believe borrowers will take in the coming six months to two years.

West Penn Allegheny's acquisition by Highmark could boost the system's declining business volume, Standard & Poor's said. Analysts could raise the system's credit should Highmark successfully close the deal, which includes $475 million in grants, loans and medical education funding.

Moody's Investors Service called the deal “credit positive” for West Penn.

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