title: The fall of the house of AHERF: the Allegheny bankruptcy.
abstract: The $1.3 billion bankruptcy of the Allegheny Health, Education, and Research Foundation (AHERF) in July 1998 was the nation's largest nonprofit health care failure. Many actors and factors were responsible for AHERF's demise. The system embarked on an ambitious strategy of horizontal and vertical integration just as reimbursement from major payers dramatically contracted, leaving AHERF overly exposed. Hospital and physician acquisitions increased the system's debt and competed for capital, which sapped the stronger institutions and led to massive internal cash transfers. Management failed to exercise due diligence in many of these acquisitions. Several external oversight mechanisms, ranging from AHERF's board to its accountants and auditors to the bond market, also failed to protect these community assets.
authors.affiliation: Wharton School of the University of Pennsylvania, Philadelphia, USA.
authors.forename: L R
authors.initials: LR
authors.lastname: Burns
authors.forename: J
authors.initials: J
authors.lastname: Cacciamani
authors.forename: J
authors.initials: J
authors.lastname: Clement
authors.forename: W
authors.initials: W
authors.lastname: Aquino
mesh_terms: D000046:Academic Medical Centers / Q000458:organization & administration; D016361:Bankruptcy / Q000458:organization & administration*; D003659:Decision Making, Organizational; D004465:Economic Competition; D005377:Financial Management, Hospital; D019981:Health Care Sector; D006273:Health Facility Merger / Q000458:organization & administration; D006769:Hospitals, General / Q000191:economics; D006784:Hospitals, Teaching / Q000191:economics; D006788:Hospitals, Voluntary / Q000191:economics*; D006801:Humans; D008329:Managed Care Programs / Q000458:organization & administration; D009096:Multi-Institutional Systems / Q000191:economics*; D019982:Organizational Case Studies; D010414:Pennsylvania; D012051:Reimbursement Mechanisms; D012941:Social Responsibility