The deal to rescue Allegheny Health, Education and Research Foundation's four solvent hospitals is entering the home stretch.
Two-hospital Western Pennsylvania Healthcare System, Pittsburgh, completed a formal merger agreement with Allegheny General Hospital, Allegheny Valley Hospital, Canonsburg Hospital and Forbes Health System just before the Independence Day weekend.
The U.S. Bankruptcy Court trustee, AHERF and the committee representing AHERF's unsecured creditors also signed a vital companion agreement just before the holiday, which releases the four hospitals from any liability claims stemming from AHERF's bankruptcy.
On the heels of those agreements, U.S. Bankruptcy Court Judge Bruce McCullough approved an interim management agreement to let WPHS take control of the four hospitals immediately, even before the merger is legally completed.
McCullough, however, made his approval contingent on several conditions, including the exclusion of former AHERF Chief Executive Officer Anthony Sanzo from a management role in the new six-hospital organization. As of late last week the four hospitals, operating as Allegheny University Hospitals-West, were still reviewing the agreement and conditions, and they had not made any management changes, AUH-West spokesman Dennis Morabito said.
A hearing in U.S. Bankruptcy Court is scheduled for July 22 to complete the deal. Barring unforeseen complications, Morabito said, the deal could be completed 10 days later, when a required waiting period expires.
The merger, however, must also win approval from the Pennsylvania attorney general and the state's Orphans Court.
Last but not least, WPHS must arrange financing beyond the $125 million loan already pledged by Highmark Blue Cross and Blue Shield, Pittsburgh.
WPHS' final proposal for the AHERF hospitals contemplated refinancing the facilities' $426 million in long-term debt.
WPHS could not be reached for comment on the status of financing.