Butler Health System tells workers of money woes
Butler Health System employees learned recently that significant financial challenges have necessitated the need for a “significant expense reduction plan.”
CEO Ken DeFurio, who recently led a merger with Excela Health System of Greensburg, sent a letter to all health system employees and medical staff regarding the “particularly challenging” money problems plaguing the health system.
The Butler Eagle acquired a copy of the letter on Tuesday, Feb. 28.
In it, DeFurio said the financial issues were “a compelling reason” for the recent merger of the two health systems, which faced challenges separately and together.
The merger of the two health systems became official on Jan. 1.
The merger includes Butler Memorial Hospital, Clarion Hospital, Frick Hospital, Latrobe Hospital and Westmoreland Hospital.
The new health system employs approximately 7,300 people and has more than 1,000 physicians and practitioners who serve a population of 750,000.
“What has not changed is that financial challenges have become greater,” DeFurio wrote. “November, December and January were difficult months, and we anticipate similar numbers for February.”
He listed the ongoing effects of the coronavirus pandemic, staff shortages, inflation, cost increases, declines in reimbursement rates for health systems, erosion of the stock market and other factors as reasons for the health system’s financial problems.
“... (They) all contribute to losses from operations that are daunting,” DeFurio wrote.
He said that unlike other businesses, the health system cannot simply increase prices due to the requirements of Medicare, Medicaid and health insurance contracts.
“Out of necessity, and to secure our long-term future and growth, we have embarked on a significant expense reduction plan,” DeFurio told employees. “We must substantially reduce our operational costs.”
He said the health system’s senior executive team is now working to create and sustain cost-saving initiatives.
“No part of the system is immune from scrutiny,” DeFurio said.
DeFurio pledged to stabilize the organization for the short term and use the cost-saving initiatives to provide long-term solvency.
“I appeal to each and every one of you, regardless of your role or responsibility, to step up and contribute to our success,” he wrote in closing. “It is a success that together we will attain.”
An email from the health system said officials will not elaborate on the letter’s contents.
