Potential WPAHS Acquisition May Include Bankruptcy Court

June 16, 2011 – In The News
Pittsburgh Business Times
A potential acquisition of West Penn Allegheny Health System by Highmark Inc. would involve the health system's buildings, licenses and equipment. This could include a voluntary reorganization of the hospital network in bankruptcy court.

Ed Kabala said one option could be that some parts of the hospital system, such as the corporate partner, could voluntarily file for bankruptcy, a path used by West Penn Allegheny's predecessor institution in the late 1990s. This path offers a way to offload debt and smooth the way for an acquisition.

"Highmark doesn't want to be in the debt business," Kabala said. "The assets are the people, buildings, licenses, equipment."

Using a bankruptcy strategy, an acquisition could be completed in three to six months, said Kabala. Union contracts could be preserved to maintain consistency in services, but some debts and physician contracts that cost the system money could be discarded.