West Penn Allegheny Health System is facing some fallout from its $73 million writedown.The SEC decided to look into the hospital's finances after the system announced that it had overstated its revenue by $73 million, including $67 million in patient receivables. This came after the system refinanced $758 million in bonds last year. SEC executives describe it as an "informal" inquiry.
The announcement that West Penn would take the $73 million writedown led to downgraded ratings on the Fitch and Moody's Investors Service. Fitch downgraded the bonds to BB minus from BB and placed the issue on a negative rating watch. The negative rating watch means that West Penn's ratings could fall further depending on how Fitch feels about its analysis of full fiscal year results, the state of the fiscal '09 budget and the system's efforts to improve its financial position.
As we reported previously, the system had been in financial trouble even before the $73 million issue came up, reporting an operating loss of $15.6 million on revenue of $1.1 billion for the nine months ending in March. Small wonder that the SEC is suspicious of a $73 million credit that may have come just in time for West Penn to float its bond issue successfully.
To learn more about the SEC inquiry:
- read this Pittsburgh Business Times piece
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