The West Penn Allegheny Health System said today it lost nearly $16 million during the three-month period ended Sept. 30.
The hospital system attributed the loss to its adoption of more conservative accounting methods, to undisclosed fees it paid to consultants as a part of a restructuring, and a change in how investments are recorded.
About 300 full-time positions were eliminated during the period, either through attrition or layoffs. The loss compared to a profit of more than $1.5 million during the comparable period a year ago.
Another reason for the loss was a steep decline in investment income, which dropped to $1 million from $7 million during the year-earlier quarter, blamed on adverse stock market conditions.
For the quarter, the parent company of six hospitals recorded a 6.4 percent increase in revenue from patient services, to $386.3 million, while total revenue rose 6.6 percent to $401.5 million. The patient revenue increase was attributed to a 2.9 percent jump in admissions and other factors.
Expenses increased 9.5 percent, to $418.8 million for the quarter.
West Penn Allegheny's restructuring, under the guidance of CEO Dr. Christopher Olivia, as of mid-November, resulted in more than $53 million savings, the health system said.
The three-month loss comes less than a month after the health care system, which includes the remnants of the former Allegheny Health Education and Research Foundation, reported a net loss of $62.8 million for the year ended June 30, largely due to a $73 million accounting mistake disclosed earlier in the year.
The mistake prompted investment rating agencies to downgrade West Penn Allegheny's credit rating. Documents show the mistake was uncovered after a special accounting review of the system's balance sheet. The review identified $67 million of adjustments related to accounts receivable -- or payments from patients and vendors -- and $6 million of other adjustments.
The $67 million in accounts receivable adjustments was broken down as follows: $5.4 million in fiscal year 2007; $13.1 million in fiscal year 2006; and an adjustment of $48.5 million for "differences between estimated collection rates and actual collection rates."
The Securities and Exchange Commission is reviewing the accounting mistake.
In addition to the Western Pennsylvania Hospital in Bloomfield and Allegheny General Hospital on the North Side, West Penn Allegheny Health System includes Alle-Kiski Medical Center in Natrona Heights, Canonsburg Hospital in Washington County, West Penn Hospital-Forbes Regional campus in Monroeville and AGH-Suburban campus in Bellevue.
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