Dive Brief:
- Nearly two years since acquiring Highmark in 2013, West Penn Allegheny Health System reported its first quarterly operating profit.
- The news comes after a less-than-rosy start to 2014,after which Allegheny reported a $13.3-million loss in operating income (and net revenue of $13.5 million). Still, officials are encouraged by $2.18-million operating profit in the last three months of 2014, which marks a $5.5-million increase over the same period one year earlier.
- However, the health system only saw a 54% occupancy rate during the fourth quarter.
Dive Insight:
The hospital system's low occupancy rate is raising eyebrows among healthcare analysts. Stephen Foreman, a Robert Morris University economics and health administration professor, told the Pittsburgh Post-Gazette that comparing the profit with occupancy rates "does beg the question" whether parent Highmark insurance was simply paying the health system more. In response, Dan Laurent, spokesman for Highmark Health's Allegheny Health Network, noted that hospital occupancy is dwindling nationwide because of the rise in outpatient services. Also, "continuing improvement in operations and efficiencies across the system" are helping, too.
The news is also good for Highmark, which has gotten its fair share of bad press over the ongoing dispute with the University of Pittsburgh Medical Center. Most recently, PA Gov. Tom Wolf stepped in to clarify that women who have Highmark Health coverage and learned of their pregnancy in 2014 will be able to deliver at University of Pittsburgh Medical Center's Magee-Womens Hospital.
Want to read more? You may enjoy this story on the Highmark Health gamble: The risks of hospital-insurer integration.