![]() ![]() Karl Propst, director at Fitch Ratings, said the change to a “negative” rating is related to the breach of Butler’s debt service contract. The health system declined to comment further on the letter. “We are confident we are addressing the matter in a prudent and productive manner for the sustained benefit of our new organization.” ![]() “The ratings agency’s report is a straightforward review of the situation and is reflective of the challenges all providers are facing in today’s health care economics,” said Tom Chakurda, spokesperson for Excela Health, on behalf of the combined health system. 31 suggest it has persisting operating challenges, “exacerbated by inflationary pressures on labor and supplies, but also patient volumes, which have yet to rebound to pre-pandemic levels.” The bonds were issued by the Butler County Hospital Authority.įitch’s analysis noted that financial results for Butler Health System through Dec. “We will make necessary changes and use this scale to our advantage.”Ĭredit rating agency Fitch Ratings recently 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.įitch revised the rating on $79 million worth of revenue bonds. “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,” DeFurio said. He added that other health systems nationwide and in Western Pennsylvania are facing similar challenges, and the health system “cannot respond simply by increasing our prices” because of the way Medicare, Medicaid and health insurance contracts function. “These challenges were a compelling reason for the organizations to become one.” “Butler Health System and Excela Health were both fully aware of the financial challenges that we faced separately and together as we studied and completed the merger,” he said. He did not elaborate on what the plan might entail. Senior executive team members within the company are “working with their direct reports” on the cost-saving plan, and the entire health system is being scrutinized, DeFurio said in the letter. 31, Butler Health System reported an operating loss of more than $23 million, according to a continuing disclosure report.Īt Excela, the same six months in 2022 saw an operating loss of more than $15 million. “We must substantially reduce our operational costs.”įor the six-month period ending Dec. ![]() “November, December and January were difficult months, and we anticipate similar numbers for February,” DeFurio said in the letter. In the letter - sent to employees and medical staff at the Greensburg- and Butler-based health systems and acquired by the Tribune-Review - DeFurio cited ongoing financial pressures from the pandemic, staff shortages, inflation, cost increases, declines in reimbursement rates and the stock market as reasons for future cost-cutting measures.ĭeFurio, who had led Butler Health, became the new organization’s leader in January, Economic storm clouds are on the horizon for the newly combined Excela and Butler health systems, and a “significant expense reduction plan” is in the near future, according to an internal letter signed by President and CEO Ken DeFurio. ![]()
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