A troubled Pittsburgh health care system is expected to announce as soon as today that it has reached a deal to avoid a $1.6 billion bankruptcy, which would cut its debt and leave its assets in the hands of insurer Highmark Inc., Reuters reported yesterday. Under the tentative agreement, Highmark would offer cash payments of about 87.5 cents on the dollar, plus accrued interest, to West Penn Allegheny Health System's bond holders. The system has about $710 million of outstanding debt, which was issued in 2007. A major regional healthcare system, West Penn grew out of the remains of another healthcare system that went bankrupt in 1998. All three major U.S. credit rating agencies have cut West Penn's credit rating deeper into junk territory since November, after its $475 million merger alliance with Highmark fell apart and landed in court under the specter of a possible bankruptcy filing.
