The merger of Butler Health System with Excela Health was supposed to take the local medical groups and forge them into a larger, stronger entity that would survive and serve.

The two officially became one entity in January. In May, it adopted a new name: Independence Health System.

A new name is easy. A new financial outlook is more complicated. Independence is showing that this week.

On Monday, Fitch Ratings showed a lack of confidence in it. Just like Transunion, Experian and Equifax set a credit score that helps people secure credit cards or mortgages, Fitch, Moody’s and S&P Global issue ratings that assess investments. Instead of a three-digit number, they give grades that start at AAA and go down to D.

Butler and Excela still are graded separately. Butler’s rating fell from A to BBB. Fitch director Karl Propst noted that still is an investment-grade rating. It is, however, the lowest grade that still falls in that category. If the rating falls again, it will drop into non-investment-grade territory.

Why did this happen?

“Their general financial profile isn’t as strong as it once was,” Propst said.

By Thursday, more changes supported that. Independence spokesman Tom Chakurda characterized 53 recent layoffs — part of 226 eliminated positions since January — as regrettable, a necessary response to economic conditions. Between the two systems, Independence lost $62 million in nine months by the end of March.

This isn’t surprising. The health systems were joining forces as a survival tactic. In March 2022, Excela had $10.5 million in losses over nine months, while Butler lost $8.2 million over a year. A 2021 American Hospital Association report showed financial problems were a main driver for 40% of hospital mergers.

That doesn’t mean it isn’t concerning. The financial issues of both halves of Independence lead to obvious questions about whether merging struggling entities is the right move. Would it have been better to partner with a more stable system that could share its strength rather than its burdens?

It is too soon to panic. Independence is in its infancy. There still is time to implement moves that will accomplish the goals. Cut costs through better deals for five hospitals than just two or three. Redistribute work and share services.

However, there is something to be said for realism and the detached analysis of a financial agency.

The lowered credit rating tells investors Independence isn’t a lost cause. It has potential. It’s not a bad investment. But there are reasons for caution and prudence, especially given the importance of the health system as a community asset.

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