SEC closes probe of West Penn Allegheny as losses mount
By Alex Nixon
Published: Thursday, May 30, 2013, 7:12 p.m.
A Securities and Exchange Commission investigation of West Penn Allegheny Health System that dates to 2008 has been closed, the hospital network disclosed on Thursday in a report that showed worsening financial losses.
“On May 20, 2013, WPAHS was advised that the SEC investigation had been completed and the SEC staff has no intentions, at this time, to recommend any enforcement action,” the system said in its financial report for the quarter ended March 31.
West Penn Allegheny, which was acquired by health insurer Highmark Inc. last month, reported a net loss of $34.6 million for its fiscal third quarter. The loss was higher than in the same period a year ago when the system reported a net loss of $19.8 million.
The SEC started an informal investigation of West Penn Allegheny in August 2008 after the hospital system admitted to inflating revenue by $73 million. That led to a restatement of its financial results for the year ended June 30, 2008, and a net loss of $62.8 million for that year.
In 2009, the SEC opened a formal investigation of the hospital system. Then in November of last year, West Penn Allegheny disclosed that the SEC had sent it a so-called Wells Notice, in which SEC staff recommended the commission bring civil or administrative action against the hospital system for disclosures it made to bond investors in 2009.
Thursday's disclosure by the hospital network does not make it clear if the Wells Notice was resolved. Spokesman Dan Laurent declined to comment on the SEC action. The SEC previously had declined to comment on the matter.
In a written statement, Laurent addressed the hospital network's worsening financial results. “The report only further underscores why the affiliation between West Penn Allegheny and Highmark, and the establishment of the Allegheny Health Network, was so critical to the future of health care in our region,” he said.
Highmark, the state's largest health insurance company, completed its $1.1 billion purchase of West Penn Allegheny on April 29 after the state Insurance Department approved the deal.
With West Penn Allegheny, Jefferson Regional Medical Center, doctor groups and other medical services, Highmark created the Allegheny Health Network to compete with UPMC, the largest hospital network in Western Pennsylvania.
West Penn Allegheny said on Thursday that when the deal closed, Highmark loaned it $100 million and gave it $39.6 million in grants.
Highmark has said it will turn around the finances of West Penn Allegheny by convincing patients to choose its hospitals over those owned by UPMC.
But in the first three months of this year, West Penn Allegheny's revenue continued to fall as fewer patients chose to be treated at one of its five hospitals. Revenue dropped to $378 million, down from $388 million in the same period a year ago.
The led to a loss from operations of $37.7 million, compared with a loss from operations last year of $23.9 million.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Corbett: Coal is working
- PNC’s CEO elected board chairman
- Winning streak for stocks continues
- ‘Old GM’ defense expected in court fight over faulty ignition switch
- Tesla delivers 1st cars in China
- Drugmakers ready to carve out deals any way they can
- McDonald’s profit slips amid weak sales
- AT&T joins crowded field with online video plans
- BNY Mellon hires national sales manager for Dreyfus
- BNY Mellon notches $661M profit in 1st quarter
- ATI takes 1st-quarter loss, but says outlook is good