Officials from Highmark Inc. and West Penn Allegheny Health System spoke by phone with an eye toward resuming talks about a $475 million affiliation between the two Pittsburgh entities.
West Penn, Western Pennsylvania’s second-largest hospital system, called off affiliation talks two weeks ago saying insurer Highmark demanded it file for Chapter 11 bankruptcy before closing the deal.
West Penn’s 2007 issuance of $737 million of double-B-rated revenue bonds through the Allegheny County Hospital Development Authority made it one of the largest speculative-grade issuers in the municipal market.
All three major bond rating agencies have West Penn under review. The system reported an operating loss of $88 million through the first nine months of fiscal 2012, ending March 31.
Highmark, with 4.9 million health plan members in Pennsylvania, West Virginia and Delaware, sued West Penn and its affiliate hospitals in the Allegheny County Court of Common Pleas over the canceled deal.
On Wednesday, William Winkenwerder and Jack Isherwood, the Highmark chief executive and West Penn board chairman respectively, spoke by phone.
“There was a phone call initiated by our board chairman where he reiterated the need to meet and that WPAHS was ready to do so immediately,” said Kelly Sorice, West Penn’s vice president for communications. “Mr. Isherwood indicated that Dr. Winkenwerder was open and receptive to a meeting, and promised to get back to him.”
Highmark sees a West Penn purchase as a chance to compete against the dominant University of Pittsburgh Medical Center. West Penn owns six hospitals -- including Allegheny General, Canonsburg General, and Forbes Regional -- and seven outpatient care centers.
West Penn’s predecessor, the Allegheny Health Education and Research Foundation, filed a $1.3 billion bankruptcy in 1998. It was by far the biggest health care bankruptcy filing at the time. It emerged as West Penn in 2000.