Moody's Investors Service has downgraded the bond rating for West Penn Allegheny Health System in Pittsburgh to Caa1 from B2, according to a Moody's news release.
Moody's downgraded West Penn's bonds and kept the health system's outlook as "negative" due to West Penn's severe financial stress, according to the release. Officials at Moody's said that if health insurer Highmark had not invested $150 million in the system, West Penn could have defaulted on the $737 million in bond payments.
Although Highmark may be taking over West Penn, a deal may not close until 2013. Without the affiliation agreement between the two parties and Highmark's financial support — and if their agreement is broken off — the bond rating would be even lower, according to the release.
West Penn reported a $75 million operating loss in fiscal year 2011, aside from $23 million in nonrecurring operating revenue, and it saw a 15 percent decline in discharges.
Moody's downgraded West Penn's bonds and kept the health system's outlook as "negative" due to West Penn's severe financial stress, according to the release. Officials at Moody's said that if health insurer Highmark had not invested $150 million in the system, West Penn could have defaulted on the $737 million in bond payments.
Although Highmark may be taking over West Penn, a deal may not close until 2013. Without the affiliation agreement between the two parties and Highmark's financial support — and if their agreement is broken off — the bond rating would be even lower, according to the release.
West Penn reported a $75 million operating loss in fiscal year 2011, aside from $23 million in nonrecurring operating revenue, and it saw a 15 percent decline in discharges.
Related Articles on Hospital Downgrades:
Moody's: Removing Property Tax Exemption for Illinois Hospitals Would Be "Credit Negative"
Fitch Downgrades Massachusetts' Saints Medical Center Amidst Ended Steward Talks
From Stable to Negative: 6 Reasons Behind Gloomy Non-Profit Hospital Outlooks