Less than one week after an audit report from acounting firm KPMG voiced its serious doubts about its long term viability, West Penn Allegheny Health System announced regional health insurer Highmark will invest $20 million in the first phase of its redevelopment of Forbes Regional Hospital.
The newest investment by Highmark comes as the two companies await regulatory approval on an affiliation agreement announced by the two companies last November that would see Highmark provide more than $475 million in loans and grant to ailing WPAHS.
The infusion of cash from Highmark will allow the hospital system to renovate medical/surgical units, open a breast care center and add a third cardiovascular surgery operating room, among other upgrades.
"West Penn Allegheny and its affiliated hospitals are vital community resources that play a critical role in the health and economic vitality of this region," said Kenneth R. Melani, MD, Highmark's president and CEO, in a press release announcing the newest investmen in WPAHS. "Today, those who live and work in the eastern suburbs, and all who have come to rely on Forbes Regional for its excellent patient care services, have reason to celebrate."
[See also: Highmark seeks to acquire cash-strapped West Penn Allegheny Health System; Highmark, West Penn boards approve affiliation agreement.]
According to published reports, the Forbes announcement was originally scheduled for last week, but was pushed off in order to allow West Penn to respond to the KPMG report, which expressed doubt over West Penn's ability to continue to operate in light of its more than $51 million losses for its latest fiscal year, which ended June 30, 2011.
Keith T. Ghezzi, MD, interim president and CEO, WPAHS responded to the audit by making a plea for an expedited review of the Highmark affiliation.
"We are absolutely committed to our partnership with Highmark and to improving our financial situation," Ghezzi said in a prepared statement. "The audit report underscores the need for expedited review and approval of the Highmark-WPAHS transaction to preserve important community assets and preserve access to excellent healthcare for all residents of Western Pennsylvania."
In addition to the Forbes investment, announced today, Ghezzi also highlighted an earlier cash grant from Highmark last year that will enable the health system to reopen the emergency department at its flagship West Penn hospital location.
"Highmark's financial support is enabling immediate improvements in our facilities," Ghezzi added. "As we reinvent our system with Highmark's support, we are implementing new ways to operate more efficiently and to grow revenue, while providing the best possible care to our patients. Early efforts to streamline operations and to increase accountability are beginning to yield measurable improvements."
In a separate development, WPAHS also announced that it will delay the opening of the Temple University School of Medicine at its West Penn Allegheny Health System regional campus – for which Highmark has pledged to provide $75 million for scholarships and other health education programs – pending final approval by industry regulators of the affiliation agreement.