Editorial: Independence has rose-colored glasses for Excela’s red-ink report
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The idea was to save money while still doing the job.
That was what then-Excela Health CEO John Sphon, now retired, said in June 2022 when the Greensburg-based hospital network and Butler Health System announced their merger.
“We believe strongly that our new partnership will extend our intellectual and financial capital,” his statement said. “In doing so, we can enhance access to care, decrease the cost of care and continue to focus on providing improved experiences and outcomes for patients.”
The hope was that the new whole could be greater than the sum of its parts. That didn’t seem that hard to do when the sum was negative last year. The June 2022 fiscal year ended with Excela losses of $21.8 million.
That’s a drop in the bucket compared to this year. On Thursday, the latest disclosures were released. As of June 30, Excela showed a loss of $36.2 million for the fiscal year. The health system is swimming in an additional $14.4 million in losses — a 66% increase in red ink.
That’s just for Excela, not the new Independence Health created by the merger. The two halves are filing separate disclosure reports. Butler’s is still pending.
The report had plenty of fingers to point. Independence blamed “declining inpatient and outpatient revenue,” rising cost of staffing and low reimbursement for Medicare and Medicaid patients. All of that is believable. They are challenges every hospital is facing.
But it is also completely predictable. These are not new issues.
It’s concerning that this report follows other worrying signs of the nonprofit’s financial health, including the slashing of 226 positions. Rating agency Fitch downgraded the Butler credit rating in June. That followed a negative flag for Butler after breaking a loan agreement with Truist Bank of North Carolina. These speak to the confidence of industry experts — and it’s not a great outlook.
Independence CFO Tom Albanesi is claiming optimism in the hospital system’s plans.
“We are confident that our ongoing actions to drive efficiencies, coupled with initiatives to enhance revenue, will prove productive,” he said.
That might sound more encouraging if the picture painted 17 months ago wasn’t so rosy, too.