Fitch Ratings has placed on watch the BB-minus rating on $747.7 million of Series 2007A revenue bonds issued by the Allegheny County Hospital Development Authority on behalf of the West Penn Allegheny Health System of Pittsburgh.
Fitch has a negative outlook on West Penn.
Health insurer Highmark Inc. announced last week it would buy West Penn for as much as $475 million. Highmark, Pennsylvania's largest health insurer, also agreed to immediately infuse $50 million into the provider's coffers.
Along with the announcement, Christopher Olivia resigned as West Penn president and chief executive. He is the fifth executive to leave the hospital network in less than a year. Dianne Dismukes, who joined the system in May, succeeds him.
"WPAHS continues to amass significant operating losses in the current fiscal year as it implements the downsizing of its system and is facing large pension liabilities," Fitch analysts said in a statement, adding that future ratings and outlooks would hinge on whether the deal materializes.