West Penn Allegheny Health System (WPAHS) makes wellness a priority for Steel Town residents. The health system, which operates with some 1,600 beds, is a network of affiliated hospitals serving the greater Pittsburgh area, including Allegheny General Hospital, Allegheny Valley Hospital, Canonsburg General Hospital, The Western Pennsylvania Hospital (West Penn), and the West Penn-Forbes Regional Campus. Among its specialty services are cancer treatment, emergency medicine, and orthopedics. The system's clinical campuses are affiliated with Drexel University and Temple University. WPAHS handles some 200,000 emergency visits each year.
Change in Company Type
As WPAHS struggled under economic and financial difficulties, in 2011 the system announced plans to be acquired by insurance firm Highmark in a $475 million deal (including four-year commitments for facility improvements and educational and scholarship funding). Highmark also paid $50 million to sustain operations at certain ailing WPAHS facilities that year.
The deal fell into doubt in September 2012 when WPAHS moved to terminate the agreement, stating that Highmark violated its terms by requesting that West Penn file for bankruptcy prior to the deal's closing. Highmark sued to keep the deal on track, and a judge ruled in its favor in November. After several months of negotiations, in January 2013 Highmark raised the total price of the transaction to nearly $1.2 billion when it agreed to buy out WPAHS' bondholders some $635 million and added a $50 million reimbursement term to the deal.
Facilities in the WPAHS system employ about 1,700 physicians and handled more than 164,000 emergency room visits during fiscal 2012. The centers also cared for 56,000 inpatients and some 4,000 newborns. Outside of its main hospitals, the WPAHS physicians' organization operates 230 primary and specialty care centers in western Pennsylvania.
The WPAHS facilities also help to train 450 residency and fellowship program medical students each year through their affiliations with area universities. In addition, the hospitals help to conduct clinical research trials through partnerships with external companies, government entities, and other organizations.
Prior to its negotiations with Highmark, the health system was already working to improve its financial situation through various restructuring measures. WPAHS's financial troubles can, in part, be attributed to declining payments from Medicare and Medicaid, as well as lower utilization rates caused by decreased patient spending during troubled economic conditions.
For the fiscal year ending June 2012, WPAHS reported net patient revenues of $1.5 billion. It also had consolidated assets of $1.3 billion and total liabilities of $1.5 billion.
In 2010 WPAHS began consolidating certain operations of its Pittsburgh hospitals, West Penn and Allegheny General, as a way to downsize operations and control costs. The efforts reduced duplicate services by relocating services such as orthopedics, oncology, cardiology, and neurology from West Penn to Allegheny General, resulting in a reduction of the number of beds at West Penn from 500 to about 290. However, new funding from Highmark is helping WPAHS revitalize the hospital; expansion of the West Penn emergency room began in 2012, and other construction measures are planned.
WPAHS also added 50 patient rooms to the Allegheny General campus in 2011 to handle higher patient volumes resulting from the downsizing of West Penn. The system is also making expansion efforts in other areas where it sees growth potential. It is adding outpatient clinics in suburban areas, and it completed expansions of the Forbes Regional and Allegheny Valley Hospital (formerly the Alle-Kiski Valley Hospital) emergency rooms during 2010. – less