West Penn Allegheny Health System in Pittsburgh has released revised financial figures for its 2013 fiscal year, and the diagnosis was worse than originally thought.
West Penn lost $370.8 million in the year ended June 30, 2013, significantly more than the $137.6 million net loss originally recorded in October.
A $214.7 million "goodwill impairment" was the reason for the increased losses. A health system or company records a goodwill impairment if the fair market value of its assets diminishes greatly. Last April, the Pennsylvania Insurance Department approved the affiliation between Blue Cross Blue Shield subsidiary Highmark and West Penn. The green light ended an almost two-year saga between Highmark and West Penn, but it brought about much scrutiny, which resulted in a deflated value and, consequently, the goodwill impairment.
Liz Allen, interim CFO of Allegheny Health Network, the health system created by Highmark and that now includes West Penn, told the Pittsburgh Post-Gazette the accounting measure was not a surprise and was actually a requirement. "We expected this to happen," she said.
More Articles on West Penn Allegheny Health System:
S&P Predicts Weaker-Than-Expected Earnings for Highmark
The Most Influential Hospital Transactions of 2013
CFO of Allegheny Health Network Resigns