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Losses narrow at WPAHS under Highmark ownership

| Thursday, May 1, 2014, 6:00 p.m.

Financial losses at West Penn Allegheny Health System are getting smaller as the Highmark Inc.-owned system makes progress on a turnaround plan.

The five-hospital system, which forms the core of Highmark's Allegheny Health Network, reported a net loss of $12.5 million in the January-March quarter. The result was significantly improved from the net loss of $34.6 million the system posted for the same period a year ago.

“Although much work remains to be done as our comprehensive turnaround plan for WPAHS is fully implemented, the success of those efforts to date should be reassuring,” spokesman Dan Laurent said on Thursday.

The loss reduction was helped by a boost in revenue to $402.6 million in the quarter, up 6.5 percent from $378 million a year earlier.

Revenue was higher because of increases in reimbursement rates negotiated with insurers and better productivity from workers.

Expenses rose modestly to $417.8 million, from $415.7 million. The network has been laying off workers over the last year since Highmark, the state's largest health insurer, acquired it in April 2013.

The system's loss from operations, which doesn't include gains from investments, narrowed to $15.1 million, down from $37.7 million a year earlier.

The results “further demonstrate the significant progress being made by Allegheny Health Network in its efforts to strengthen the operational performance of the WPAHS hospitals and position them for long-term success,” Laurent said.

In the past week, the system has released revised financial statements for two periods that showed much larger losses than previously reported. Losses ballooned to more than $370 million in the fiscal year ended June 30 because of an accounting change that resulted in a non-cash charge. It updated a report for the six-month period ended Dec. 31, showing a loss of $81.5 million, also from an accounting change.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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