Lessons from the Allegheny bankruptcy.

On July 21, 1998, the nonprofit Allegheny Health, Education, and Research Foundation (AHERF) filed for bankruptcy, with $1.3 billion in debt and 65,000 creditors. The Pittsburgh-based organization had pursued an aggressive strategy of acquiring physicians and hospitals in the Philadelphia area. Its dramatic collapse prompted the entry of a for-profit hospital chain into the Philadelphia market, as Tenet Healthcare Corp. purchased eight hospitals from AHERF at firesale prices. This Issue Brief chronicles the hows and whys of the nation's largest nonprofit health care failure, and analyzes its lessons for other struggling academic health centers.