The System also booked a $70.7 million one-time non-cash asset impairment charge, related to West Penn Hospital and the Suburban Campus of Allegheny General Hospital, as well as $11.8 million of other restructuring costs. The impairment charge, required under Generally Accepted Accounting Principles, reduces the carrying value of the hospitals’ buildings and equipment to estimated fair market value. Without these restructuring costs, the System’s operating loss for fiscal year 2010 would have been $7.4 million, while its net profit would have been $19.4 million.
“While we did incur some anticipated restructuring charges, it is important that we were able to move our organization forward operationally in fiscal 2010,” said Dr. Olivia. “We spent the last two years stabilizing the health system and improving our ability to generate cash flow from operations. At the same time, we developed strategic plans aimed at completely transforming our healthcare delivery model for the future. The stable cash position we developed in these past two fiscal years is enabling us to continue executing our plans in fiscal 2011.”
In June 2010, WPAHS announced plans to implement the remainder of its urban consolidation plan, which will eliminate duplicative inpatient services among its city hospitals. The System recently discontinued inpatient services at its Suburban Campus in Bellevue, and announced on Friday a focused mix of services for the Western Pennsylvania Hospital, which will become effective in January 2011.
“I believe we are moving forward at a remarkable pace,” said Dr. Olivia. “However, there is still much work to do and many challenges lie ahead. Though fiscal 2011 will be a difficult time of transition for us, we remain confident that we are on a course that will allow us to continue practicing medicine and improving the lives of the people of the Western Pennsylvania region.”