PITTSBURGH — A shuffle of top executives at Highmark Health’s Allegheny Health Network continues as the 14-hospital health care system struggles to end three years of operating losses that continued through the end of September.
Eight AHN executives — three with decades of experience — have left or been reassigned within the past year. Among those leaving was Louise Urban, a registered nurse, who had almost 32 years’ experience at AHN hospitals, most recently serving as system COO.
On Monday, AHN said that system CFO James Rohrbaugh was leaving to “pursue other opportunities,” which followed the departure a week earlier of his colleague, James Kanuch, CFO of AHN’s physicians’ group. Rohrbaugh had nine years’ experience at AHN, Kanuch, 18 years.
AHN reported an operational loss of $144.1 million for the three months ending Sept. 30, up 24% from an operations’ loss of $116.2 million a year earlier, which drove down the system’s loss on core services for the quarter to 4.2%. The quarterly loss followed three consecutive years of operational losses the system blamed on continuing fallout from the COVID-19 pandemic, even as operating revenue and patient visits rose in the latest quarter.
Things may not get much easier next year.
In a new note to investors, Fitch Ratings said nonprofit hospitals will continue to face headwinds in 2024.
“The industry continues to struggle with labor shortages and salary/wage/benefit pressure that is still compressing margins for a sizable portion of the sector, even as other core credit drivers, specifically volumes and overall liquidity, begin to improve,” Fitch wrote.
The system’s chief financial officer role will be filled by Brian Devine, current CFO at Highmark subsidiary enGen, a business tech company for health plans that was founded in 2014 as HM Solutions. Melissa Stephens Williamson, senior vice president for strategic programs and operations at Highmark Health, will succeed Devine as enGen CFO.
“At AHN, we are partnering with Highmark Health to build a sustainable, integrated economic model for health care, one that creates better outcomes and better experiences at lower costs,” AHN President Jim Benedict said in a prepared statement.
Other executives leaving Allegheny Health Network in the past year were Duke Rupert, senior vice president of operations, who had 26 years at the system; Don McNary, vice president of AHN’s Cancer Institute, 23 years’ experience; Chief Nursing Executive Claire M. Zangerle and Allie Quick, chief philanthropy officer, each six years.
The executive shuffle began a year ago with the reassignment of Cindy Hundorfean to chief living health development officer at Highmark from AHN president and CEO. Hundorfean, who was system CEO for seven years, came to AHN from Cleveland Clinic, where she served as chief administrative officer for 10 years.
Benedict, a lawyer and Cleveland Clinic alum, was named AHN president in March.
AHN spokesman Dan Laurent said the personnel changes were needed to meet the needs of a rapidly changing health care environment.
“Like all successful, forward thinking organizations, we routinely evaluate our evolving strategic objectives,” he said in a prepared statement. “Any changes implemented as part of this ongoing process reflect our efforts to position the organization as strongly as possible to meet the challenges of our industry and the diverse health needs of our patients and communities.”
Corporate parent Highmark Health, a $26 billion enterprise with a number of subsidiaries including AHN, has pumped nearly $2 billion into the system since 2013. The money has paid for five new hospitals, cancer clinics and other projects that have dramatically expanded the network’s footprint and improved its competitive footing against its biggest rival, UPMC.
Unlike UPMC and WVU Medicine in Morgantown, another health care giant in the region, Highmark’s primary source of revenue was insurance before the AHN acquisition, creating tension over reimbursement rates paid to a corporate subsidiary for patient medical care because insurance arms seek to pay lower reimbursement rates as opposed to networks whose primary source of revenue is hospital care, observers say.
UPMC was a medical provider years before it began selling health insurance in 1998 and Morgantown-based Peak Health LLC, a health insurer owned by WVU Medicine and other nonprofit investors, began selling coverage in September using a novel self-insured model.