The Tower entrance at Butler Memorial Hospital is shown on Friday, Nov. 18, 2022. Shane Potter/Butler Eagle
Butler Health System and Excela Health officials announced on Friday that the two organizations have entered into a definitive agreement to combine the parties into a new health system.
A news release from Butler Health System said the legally binding agreement, which follows a letter of intent signed in early June, defines the details of the transaction.
The agreement includes Butler Memorial Hospital, Clarion Hospital, Frick Hospital, Latrobe Hospital and Westmoreland Hospital. The latter three hospitals are in Westmoreland County.
The next step is acquiring the required state and federal regulatory approvals, which is expected to be complete by year’s end.
That action will allow the two organizations to close on the merger.
When finalized, the new health system will employ approximately 7,300 people and have more than 1,000 physicians and practitioners that serve a population of 750,000.
While a name for the new health system has not yet been decided on, all hospitals involved will retain their current names.
Ken DeFurio, BHS president and CEO, said current patients should be excited about the merger.
“Today’s announcement represents a major step forward in the process to redefine locally controlled, community-based care,” he said. “Our commitment to our patients in providing high-quality, low-cost sophisticated care in our region will be the cornerstone of the new entity.”
DeFurio said patients can expect expanded medical services to be added due to the merger.
“Over the last several months, one area we have been working on is clinical capabilities across the two organizations and who will bring what,” he said.
The first targets will be upgraded thoracic surgery, obstetric/gynecological services and cardiovascular capabilities.
DeFurio said Butler Health System once had a larger neurological presence, which could return after the merger is finalized.
“Now that we will be large enough for a neurologist to be on staff, we anticipate bringing a neurologist on board,” he said.
More sophisticated procedures, including advanced valve surgery and robotic surgery, also will be a focus of the new health system.
“It will make more sense, because we will have the efficiencies and will be large enough to make those investments,” DeFurio said.
The new health system will continue to accept all major health insurance providers as well.
“We don’t anticipate any changes,” DeFurio said. “We will continue to contract with all of the health insurance companies we contract with today.”
Patients will be able to keep the BHS doctors they have come to know and trust, he said.
“Ultimately, we will get these two medical groups incorporated,” DeFurio said. “One of these days, there will be one large physicians network, and patients will have access to any of them.”
No employees will be affected by the merger, and all wages, benefits, vacation time and other programs will remain the same, he said.
“There are not going to be any immediate changes, but as time moves forward and we get more integrated, it will be a more standardized platform,” DeFurio said of employee wages and benefits. “Wages are actually pretty consistent now between the two organizations.”
Once the merger is complete, John Sphon, longtime Excela CEO, will retire and DeFurio will become the CEO of the newly created health system.
“John will be in a advisory capacity for a few months and also a board member,” DeFurio said.
A new board of directors will be formed using board members from each system, he said.
One unique aspect of the merger, DeFurio said, is that no money will change hands.
“We are describing it as a merger of equals. One organization is not acquiring the other or taking over the other,” he said. “This is truly coming together as a 50/50 partnership.”
DeFurio said a very important element of the merger is that local control will be maintained in the new health system.
“We obviously have a lot of work to do,” he said. “We are still committed to and investing in local communities, and we are very excited that we were able to get this deal done to maintain those important aspects of who we are.”
