Independence Health is trying to stop some bleeding in 2025.
The regional health network continued to show financial losses in 2024. Independence was created in 2023 by stitching together two smaller systems — Excela and Butler.
Both had their own challenges to overcome, something many medical facilities were doing after the coronavirus pandemic, on top of facing complications of insurance programs’ reimbursements.
Independence’s 2023 losses came to $74.1 million. The numbers for the fiscal year ending June 30 totaled $41.4 million. That is better. Is it enough?
“We intend on at least cutting it in half again in 2025,” said Independence Chief Financial Officer Tom Albanesi.
So the goal is about $20 million in red ink come July. How long can this continue while Independence serves Westmoreland, Clarion and Butler counties?
It begs the question — was merging the two systems a good idea?
The Butler half of the merger carries almost 75% of the losses with $29.8 million compared to Excela’s $11.6 million. Financially, the former Butler Health System’s two hospitals are on shakier ground than Excela’s three.
In December, Fitch Ratings lowered the Butler County Hospital Authority’s bonds to a junk investment grade. That means the agency believes there is a higher potential for default.
Albanesi sounds positive about the future. He talks about “a need to keep pushing until we get where we need to go.” He says there have been negotiations with payors and contracts coming up for renewal.
He’s not alone. Chief Medical Officer Dr. Carol Fox is also upbeat, pointing to recruitment of needed specialists and the benefits of collaboration between the two former systems.
There are definitely highlights. They seem to skew toward the Excela side, however. Butler Hospital is adding two beds to its drug and alcohol unit and a diagnostic imaging machine, and its Food Institute — helping people with food insecurity learn about nutrition — has expanded to Clarion Hospital.
Meanwhile, Latrobe Hospital lost an inpatient rehab unit that was chronically underutilized but more than doubled the adolescent behavioral health beds that will open this summer. Westmoreland Hospital opened a redesigned outpatient cardiology facility and is retooling the bariatric surgery unit and upgrading the maternity center. Frick Hospital added a women’s health outpatient clinic. All of those seem more likely to contribute to Independence’s financial health.
There is no doubt that all five hospitals are valuable entities in their communities. They are needed and critical to the health of not only individuals but the local economies.
But on a purely numbers basis, it’s hard to avoid looking at what Fitch Ratings saw with Butler and comparing it to the Independence bottom line. Financial professionals look at Butler and see a risk. Is that something that should have been diagnosed sooner?