Healthcare Business News

West Penn Allegheny cuts operating losses in final six months of 2013

By Melanie Evans
Posted: April 30, 2014 - 7:15 pm ET

West Penn Allegheny Health System, Pittsburgh, reported its operating losses narrowed during the final six months of last year, a stark reversal from recent performance that saw losses accelerate for its fiscal year ended last June.

The struggling Pittsburgh health system, which was acquired by insurer Highmark in May 2013, reported an operating loss of $15.6 million on revenue of $803.5 million between July and December compared with losses of $56.2 million on revenue of $764.2 million for the same period the prior year.

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Discounting an accounting charge and restructuring costs, the operating loss for the last six months of 2013 narrows to $14.8 million.

Shrinking losses are a dramatic change from results released last week for fiscal 2013, which showed West Penn Allegheny's losses continued to accelerate, even after taking into account $214 million of the $386 million operating loss on revenue of $1.5 billion for the year was an accounting charge.

In 2012, the system's operating loss totaled $114.9 million on revenue of $1.6 billion.

Patient revenue also rebounded in the final six months of the calendar year after declining in recent years because of greater productivity and increased insurance reimbursement. During the six-month period, patient revenue increased 4.6%, or $32.9 million.

Cuts to labor costs of $13.4 million helped to shave overall expenses by $2.1 million. Spending for supplies, services and professional fees accelerated.

West Penn Allegheny's deteriorating finances prompted scrutiny from Pennsylvania insurance regulators as Highmark, one of the largest U.S. insurers, sought to acquire the system to create an integrated delivery network and bolster competition in the Pittsburgh marketplace.

Follow Melanie Evans on Twitter: @MHmevans

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