West Penn Allegheny Health System held onto its Bb3 rating from Moodys Investors Service, though analysts said the Pittsburgh systems outlook is negative. Moodys was one of two ratings agencies that lowered West Penn Alleghenys credit and threatened further action in July on news of a $73 million accounting error, including $67 million in overstated patient revenue.
West Penn Allegheny released its unaudited financials on Nov. 4 and reported the accounting mistake contributed to a $93.9 million operating loss on $1.5 billion in revenue for fiscal 2008, which ended June 30.
Moodys analysts said in a report affirming West Penn Alleghenys credit rating that health system officials quickly identified and responded to the weaker finances and anticipate a large reduction in the operating loss for the year that ends June 30, 2009. Risk of a downgrade remains should West Penn Allegheny fail to reach its budget or trips over unexpected setbacks, the Moodys report said.
Recruiting and holding onto doctors as it overhauls its leadership and physician groups are among West Penn Alleghenys key challenges, analysts said. Also important: successfully adopting turnaround initiatives, meeting operating budgets and preventing erosion of its cash reserves even as the stock market continues to fluctuate wildly. -- by Melanie Evans
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