Highmark CEO: West Penn Bankruptcy Was Strategy to Boost Odds of Regulatory Approval

In the court hearing between Pittsburgh-based West Penn Allegheny Health System and Highmark that started today, Highmark's CEO testified that he urged West Penn to file for bankruptcy to improve the odds of regulatory approval for the payor-provider merger, according to a Pittsburgh Post-Gazette report.

Highmark President and CEO William Winkenwerder Jr., MD, said he and his senior management team urged West Penn's board to restructure the health system's near-$1 billion debt to better position the deal for approval from the Pennsylvania Insurance Department.

Dr. Winkenwerder said the insurance department did not require a bankruptcy filing, but in July, Highmark officials learned that the department had secured bankruptcy experts, according to the report. "We had very serious beliefs based on the feedback we received that we needed to address the issue of operational performance and indebtedness," Dr. Winkenwerder said, according to the report.

The court hearing stems from West Penn's canceling of the $475 million merger Sept. 27. West Penn said Highmark breached their 2011 affiliation agreement by planning to have the system file for bankruptcy — a measure West Penn would consider only as a last resort. Since then, Highmark officials have denied any breach.

Today, Dr. Winkenwerder denied telling West Penn officials that Highmark would walk away from the deal even if state officials approved it. He also denied saying he thought Highmark overpaid for West Penn.

Testimony in the hearing will continue this afternoon.

More Articles on Highmark and West Penn:

78 West Penn Physicians Want to Oust Interim Leadership, Resume Highmark Talks
Senator Rallies for West Penn, Highmark to Make Amends
In Countersuit, West Penn Says Highmark is Holding it "Hostage"


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