Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Highmark Reaches out to Save Wpahs Deal

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Highmark Reaches out to Save Wpahs Deal

Article excerpt

Highmark Inc.'s top executives Friday renewed their plea to West Penn Allegheny Health System officials to drop the claim that Highmark had breached their affiliation agreement, saying the declaration "came as a surprise and great disappointment to us."

In a letter delivered to WPAHS board chairman Jack Isherwood, Highmark CEO William Winkenwerder Jr. and board chairman J. Robert Baum said West Penn Allegheny officials had apparently "completely misconstrued" the presentation Highmark made Sept. 27.

The next day, WPAHS announced that the marriage had been called off.

"What we intended and presented was a plea and a plan to jointly approach your major creditors about a debt restructuring. The proposals we discussed would fully protect the pensions of all WPAHS employees," the Highmark letter said.

"That you would not agree to this eminently reasonable approach to attempt to insure [Pennsylvania Insurance Department] approval -- as well as the long-term survival of WPAHS -- shocked us."

WPAHS board members told the Post-Gazette this week that Highmark wants the West Penn Allegheny Health System to file for bankruptcy so it can shave $600 million off the $1.4 billion price tag for rebuilding the region's second-largest health system.

Highmark, on the other hand, characterizes those discussions as preliminary, and says there is no pinpoint dollar figure. Rather, Highmark was expressing that the state Insurance Department, which must review and approve the deal, is sending "clear signals" that approval may not happen unless WPAHS takes steps to address its operating losses and debt.

In response to the Highmark letter, Mr. Isherwood wrote back late Friday that while WPAHS remains open to discussions, "we doubt our 18 directors misconstrued your words, 'The original Affiliation is history,' and subsequently, 'The Affiliation is dead.' "

He added: "As we have continued to state, WPAHS remains hopeful that Highmark can come to the table with an alternative option to bankruptcy."

Mr. Isherwood also sent a letter to West Penn Allegheny employees Friday afternoon: "We believe that Highmark's actions leave us with little choice but to explore other options," he said, adding that "there is no doubt that Highmark would be a valuable partner to WPAHS, and we would be pleased to meet with them to discuss constructive ways to move forward together. …

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