Butler Well being System’s losses almost doubled within the fiscal yr that ended June 30, based on its newest monetary filings.

The system, which merged with Excela Well being in January to create Independence Well being System, misplaced $43.3 million in fiscal 2023. Butler Well being reported a lack of $22.8 million within the fiscal yr ending June 30, 2022.

Income declined barely, from $399.2 million in 2022 to $396.4 million in 2023. Complete working bills jumped to $439.7 million from $422 million in 2022.

The system famous that its 2023 knowledge consists of 4 months of Clarion Hospital’s monetary knowledge and differs from fiscal 2022.

These losses, mixed with Excela’s lack of $36.2 million within the yr ended June 30, imply Independence Well being misplaced greater than $79 million within the final fiscal yr. That is greater than $34 million greater than final yr’s losses.

Though Excela and Butler are subsidiaries of Independence, they filed separate disclosure experiences.

System leaders blame most of the challenges on the covid-19 aftershock, inflation, low Medicaid and Medicare reimbursements and the area’s growing older inhabitants.

“The Covid-19 pandemic and pandemic have had a substantial affect on well being techniques and hospitals throughout the nation, and Butler Well being System is not any exception,” Independence President and CEO Ken DeFurio mentioned on a convention name with bondholders. “This group, this board, is obvious that we nonetheless have some structural points that have to be addressed, however we’re actually excited in regards to the long-term advantages and our skill to proceed to have native management, native administration and look after the sufferers that we serve in our native communities. That’s actually our focus.”

Officers mentioned they’re working with FTI Consulting to deal with the system’s monetary challenges.

In a convention name with bondholders, DeFurio mentioned that on the time of the merger, the Butler Well being and Excela organizations had been absolutely conscious that each “had been in a turnaround place.”

“We simply know that turning issues round via a merger goes to be a much bigger problem,” he mentioned. He careworn that the system by no means missed any debt and curiosity funds.

Well being system faces troublesome instances

Tom Albanesi, chief monetary officer of impartial insurance coverage firms, cited the problem of balancing the income coming into the system from industrial and authorities insurers.

He mentioned as a result of Western Pennsylvania’s inhabitants is growing older and fewer younger individuals are transferring in, extra sufferers are counting on Medicare and Medicaid, which do not reimburse well being techniques as a lot as companies. Insurance coverage.

“All of those circumstances are exacerbated by the truth that Medicare and Medicaid charges haven’t saved tempo with rising inflation related to the supply of medical companies, together with labor, provides and medicines,” Albanesi mentioned in a press release. The steadiness of the varieties of medical circumstances getting into the well being system may additionally pose issues, particularly as fewer COVID-19 circumstances require hospitalization.

DeForio additionally famous that the growing older inhabitants is a problem, particularly inside impartial protection. A part of the system’s long-term technique, he mentioned, is to work with native enterprise leaders to draw extra folks to the realm and negotiate with payers for higher reimbursements.

“I believe it is honest to say these demographics are regarding,” he mentioned. “The fact is we have now an growing older inhabitants however not a variety of inhabitants progress.”

Plans are again on observe

Officers mentioned that by working with FTI, Butler Well being developed a plan to return the system to a extra favorable monetary place. The system expects to halt a few of its losses in fiscal 2024 and initiatives a $22.9 million loss throughout that interval.

Impartial firms general have lower 226 positions this yr. These “workforce administration” measures are anticipated to save lots of the system $10.2 million in fiscal 2024, based on DeFurio’s presentation to bondholders.

DeForio famous that Butler Memorial Hospital has considerably diminished its use of contract employees similar to facility nurses.

“We use it very sparingly and solely when completely obligatory,” he mentioned.

The plan additionally expects negotiations with payers to indicate ends in early 2024. Different money-saving initiatives are additionally in place, together with switching from brand-name to generic medication and re-evaluating provide chain contracts and suppliers.

The impartial well being system’s two hospital presidents, Brian Fritz and Karen Allen, confirmed in August that regardless of ongoing monetary challenges, all 5 of the system’s hospitals — Westmoreland Hospital, Florida Riker Hospital, Latrobe Hospital, Butler Memorial Hospital and Clarion Hospital – will all be a part of the system’s future.

The well being system has greater than 1,000 physicians and superior apply suppliers and employs 7,300 folks.