The three major players in Pittsburgh's healthcare market—West Penn Allegheny Health System, Highmark and the University of Pittsburgh Medical Center—have a combative and litigious history (for a review, see here). Now, the possible breakup of an alliance between West Penn Allegheny and Highmark, an insurer, has landed two of those players back in court.
Highmark said in court filings this week that West Penn Allegheny had no grounds to exit the deal the partners signed almost a year ago. (“It is truly sad that Highmark has taken this step,” West Penn Allegheny responded.)
Under the deal in dispute, Highmark would acquire the health system and West Penn Allegheny would receive desperately needed cash.
Highmark began immediately to pour cash into the struggling system, which has continued to see its operations deteriorate since the deal was announced. West Penn Allegheny lost $87.8 million on operations between June 2011 and March 31, the most recent financial information available. That's compared with a $35.1 million loss for the same nine months the prior year.
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Analysts with Moody's Investors Service did not change the Caa1 bond rating for West Penn Allegheny Health System, the distressed Pittsburgh health system in line to be acquired by insurer Highmark.
That deal with Highmark—which includes $400 million in grants and loans for West Penn Allegheny and $75 million for medical education— likely saved the health system from restructuring and a possible default, said analysts.
It may also not be enough, apparently.
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