Excela-Butler health system sees further financial losses

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The merged Butler and Excela health systems reported losses of more than $62 million over the nine-month period ending March 31, according to disclosure reports released this week.

The combined health system, which laid off 13 manager-level staff members in March, officially formed from Excela Health and Butler Health System early this year.

At Butler, losses went from $1.2 million in the nine months ending March 31, 2022, to $33.1 million for the same period ending this year. In the same timeframes at Excela, losses went from $10.4 million to $29.3 million.

Tom Albanesi, the combined system’s chief financial officer, said Thursday the system is facing “strong financial headwinds” like most health care provider organizations. Struggles include “patient volumes that have not returned to pre-covid-19 levels, rising labor costs and a growing percentage of patients being insured by Medicare, whose reimbursements fall short of covering our costs,” he said in a statement.

“We continue significant and diligent efforts to eliminate our losses,” Albanesi said. “We also continue to be transparent and cooperative with our banks, bondholders and rating agencies as we execute our financial turnaround initiatives — initiatives that we are confident will have a most positive and material impact on the finances of our organization.”

The health system’s financial loss total built upon previous shortcomings from the end of last year. For the six-month period ending Dec. 31, 2022, Butler Health System reported an operating loss of more than $23 million. At Excela, the same six months in 2022 saw an operating loss of more than $15 million at the Greensburg-based health system.

An internal letter signed by President and CEO Ken DeFurio that was obtained by the Tribune-Review in late February said the newly combined system was struggling financially. The letter was sent to employees and medical staff at both health systems.

“We must substantially reduce our operational costs,” DeFurio wrote in the letter, citing a future “significant expense reduction plan.”

The layoffs in March were “from across both sides of the new system,” spokesperson Tom Chakurda said, and were from support functions that did not involve direct care personnel.

In February, credit rating agency Fitch Ratings changed its rating watch of Butler Health System to “negative” after the health system reportedly breached a bank loan agreement with Truist Bank of North Carolina.

Julia Maruca is a Tribune-Review staff writer. You can contact Julia at jmaruca@triblive.com.

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