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Allegheny Health Network reports profitable first quarter

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Tribune-Review
Allegheny General Hospital, part of Allegheny Health Network, in Pittsburgh's North Side.

Allegheny Health Network reported an operating income of $1.5 million for the first three months of 2018, about $5.3 million better than during the same period a year before, officials said Monday.

The positive financial report comes several weeks after AHN laid off 75 people in corporate office positions.

Despite the layoffs, Chief Financial Officer Jeff Crudele said AHN has increased its overall workforce by 30 percent since 2009.

“The changes we made are relatively small in relationship to the manpower addition we have made to date,” Crudele said. “We have had continuous growth, and we continue to invest in AHN in a very substantial way.”

The eight-hospital system posted its first full year of positive earnings in January, and its top executives said it is on firm financial footing.

In documents filed with the Pennsylvania Insurance Department, AHN reported a net income of $1 million, about $17 million better than it had expected.

The network, formed in 2013 from the former West Penn Allegheny Health System, beat expectations for the fourth quarter in a row after years of losing money, according to the filing.

Still, the number of emergency room visits for the quarter was 5,000 fewer than anticipated. In addition, the number of doctor visits was nearly 30,000 fewer than planned.

Last year, AHN and parent company Highmark Health announced a $700 million regional expansion plan that includes construction of four neighborhood hospitals, a 160-bed hospital in Pine and renovation of its existing facilities throughout Western Pennsylvania.

The expansion is expected to create 800 health care jobs.

During the first quarter of this year, AHN and Highmark Health announced plans to build cancer centers in Erie and Monroe­ville and broke ground on an $80 million Cancer Institute Academic Center at Allegheny General Hospital in Pittsburgh.

The network employs more than 19,000 people. It’s the region’s second largest health care provider, behind Pennsylvania’s biggest employer, UPMC.

A state-brokered consent decree that has preserved access for some Highmark members to UPMC hospitals will expire in 2019. A three-year plan AHN filed with the state calls for continued patient growth to stabilize the hospital system.

Last summer, Highmark Health obtained greater flexibility to invest in AHN.

The Pennsylvania Insurance Department loosened requirements it imposed when Highmark formed the hospital system in 2013. Highmark Health no longer has to notify the department of any transfers to AHN of more than $100 million.

Ben Schmitt is a Tribune-Review staff writer. Reach him at 412-320-7991, [email protected] or via Twitter @Bencschmitt.

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