The newly merged entity created out of the deal between Butler (Pa.) Health System and Greensburg, Pa.-based Excela Health is in financial difficulty and must cut costs, president and CEO Ken DeFurio said in an internal letter to staff.
According to a Feb. 27 Tribune Review report, the letter obtained by the newspaper called for a “significant expense reduction plan.”
“November, December and January were difficult months, and we anticipate similar numbers for February,” DeFurio said in the letter. “We must substantially reduce our operational costs.”
The difficult financial situation was due to a number of ongoing pressures, including labor shortages, inflation, cost increases and a decline in reimbursement rates, the letter said.
Butler reported an operating loss of over $23 million for the six months ended Dec. 31, while Excela saw an operating loss of more than $15 million in the same period, the report said.
The ongoing financial struggles were the very reason why the two systems needed to merge, Mr. DeFurio said.
“What hasn’t changed is that these challenges are precisely why our respective boards came to the conclusion that we are stronger as a single system,” Mr. DeFurio said. “We will make necessary changes, and use this scale to our advantage.”