Highmark, West Penn Allegheny Health System (WPAHS) and WPAHS bondholder representatives reach an agreement that positions the health system for financial stability
The amended affiliation terms and bondholder consensual plan will be submitted to the Pennsylvania Insurance Department; closing is contingent on its approval
PITTSBURGH, Jan.16, 2013 /PRNewswire/ -- Highmark Inc., West Penn Allegheny Health System (WPAHS) and selected WPAHS bondholders announced today that they have reached an agreement on the financial future of the health system. The agreement paves the way to advance the proposed Highmark-WPAHS affiliation to the Pennsylvania Insurance Department (PID) for its consideration, enables WPAHS to restructure its debt out of court, and preserves the pensions of some 12,000 health system employees.
"Paramount to our affiliation with West Penn Allegheny is preserving provider competition and choice in health care providers for the entire community," said William Winkenwerder, Jr., M.D., president and CEO of Highmark. "Throughout this process we all worked hard to develop a financial plan for the short and long term financial stability of the health system. We are glad to have reached common ground with everyone, and we appreciate the strong support from the community and elected officials."
In the consensual plan, which does not require any bankruptcy court approvals, Highmark has offered to purchase the outstanding series 2007A bonds issued for WPAHS by the Allegheny County Hospital Development Authority for cash at 87.5 percent of par amount. The plan will reduce WPAHS' outstanding debt and strengthen its balance sheet, forming a more solid foundation for the health system's future success as part of Highmark's integrated delivery network.
"We are pleased that West Penn Allegheny, our bondholders and Highmark have reached this important milestone to help further our pending affiliation with Highmark," said Jack Isherwood, WPAHS board chair. "We believe our partnership will preserve this important community asset that provides high-quality, efficient health care for our patients."
The original affiliation agreement with WPAHS was amended to strengthen the financial position of the health system. A Form A reflecting the amended Highmark and WPAHS affiliation agreement will be filed with the PID seeking the necessary approval.
"We realize the PID has important diligence and review work ahead. Highmark will work responsively to ensure all further needed information is provided so that a good and prompt decision can be made," said Dr. Winkenwerder.
Maintaining competitive health delivery systems boosts the economic vitality of the region, and it ensures that costs will be kept lower, while preserving stronger, more economically viable communities throughout Western Pennsylvania. West Penn Allegheny is an important part of our community and delivers high-quality health care. It is also important to preserve competition in the health insurance marketplace, according to Dr. Winkenwerder.
In a rapidly changing health care environment, Highmark is firmly committed to working with all segments of the community to make necessary changes to help control health care costs, improve quality of patient care and patient safety, preserve options and choice for individuals, employers, physicians and other health care practitioners and create a better patient experience. WPAHS is an important piece of Highmark's objective of creating an integrated delivery network to better serve the community. Highmark previously announced plans to affiliate with Jefferson Regional Medical Center and Saint Vincent Health System, while maintaining strong working relationships with community hospitals throughout the region. In addition, Highmark has launched construction of a Medical Mall.
SOURCE Highmark Inc.
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