Allegheny Health Network posts encouraging 2Q results

Pittsburgh Post-Gazette

The Allegheny Health Network recorded $16.45 million in operating income in the second quarter of 2017, as officials say the sevenhospital system hit positive midyear operating numbers for the first time in more than a decade.

AHN, the provider arm for Highmark Health, had a 2.1 percent operating margin for the three-month period and $28.33 million in profit, which network officials said “represent the organization’s best performance since its inception” while putting it well ahead of projections made last fall.

Those projections had anticipated a $6 million operating income loss as well as negative net income and operating margin.

“This has been a sustained and pretty systematic process to continuously improve the operations quarter by quarter. This is not a onequarter phenomenon,” said Jeff Crudele, Allegheny Health Network’s chief financial officer on Wednesday. “We’re making good progress on almost every front.”

Patient volumes at AHN facilities, both for admissions and outpatient registrations, came in just below projections for the second quarter although ahead of the midyear 2016 numbers. “I expect that our volumes will stay on that trajectory they have, which is a positive,” Mr. Crudele said.

AHN is trying to right its financial ship even as Congress debates an overhaul of the health care system that could affect hospital revenues and “certainly we’re looking at what’s happening at the national level. Everyone in the industry is watching very closely,” Mr. Crudele said.

“But it’s hard for anyone to predict the impact without clarity on what they’re going to pass.”

In the meantime, he added, “We’re staying focused on the things that are going to make this a longterm value play.”

The second-quarter results represent a nice rebound from AHN’s first quarter $3.84 million operating loss, a turnaround that officials attributed to a number of factors including a stable patient volume, improved clinical programs that reduced patient hospital stays and readmissions, more favorable contracting with payers and overall operational efficiencies.

A year ago, AHN had a $16.7 million operating loss and an $18.72 million deficit for the first six months for 2016.

The new figures, released Wednesday, are part of a quarterly financial disclosure to the Pennsylvania Insurance Department.

The department requires the reports as a condition of its 2013 approval of the West Penn Allegheny Health System, whose hospitals now comprise the core of the Allegheny Health Network.