Butler Health System and Excela Health, both based in Pennsylvania, finalized their merger January 1. The two health systems have come together to form a five-hospital system that is now the third largest in western Pennsylvania, following UPMC and Allegheny Health Network.
The new health system will generate more than $1 billion in revenue and serve a population of 750,000 in western Pennsylvania. The new entity will employ about 7,300 people and have more than 1,000 physicians and practitioners, Butler and Excela said.
The five hospitals operated by the new entity span three Pennsylvania counties. They are in the following cities: Butler, Clarion, Mount Pleasant, Latrobe and Greensburg.
The organizations initially announced their plan to merge in June and signed a definitive agreement to merge in November. The definitive agreement and other legal documents have been submitted to the state and federal government for review, the health systems said.
The merger comes at a financially challenging time for both organizations. Butler reported an operating loss of $5.9 million on operating revenue of $114 million for the third quarter of 2022, and Excela reported an operating loss of $2 million on operating revenue of $163 million for the same period, the Pittsburgh Post-Gazette reported.
Ken DeFurio, Butler’s CEO, will serve as CEO of the new health system. John Sphon, Excela’s CEO, will retire in March. He will stay on as an advisor for several months and will remain a trustee of the new entity.
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“This was a crucial step in bringing the two organizations together,” DeFurio said in a statement. “Over the past year, both boards invested an immense amount of work, time and energy to determine if this merger made sense. We now look forward to implementing the opportunities that we’ve identified and discovering new ones.”
Sphon agreed, calling the merger a “watershed moment” in the history of both organizations.
The new health system does not have a name yet. However, Butler and Excela have said that they plan to release more information about the new entity — including its name — in the “next few weeks.”
Both organizations stressed that while the deal is now closed, there is still a lot of work to be done to create the new integrated health system.
“It is important to underscore that a merger process of this magnitude is very complex and requires an approach that is highly thoughtful and diligent,” DeFurio said in a statement. “We can now continue our focus on integrated governance, executive structure and other elements that are key to effective and efficient delivery of care.”
The deal made by Butler and Excela is the first hospital merger to be completed in 2023. Some of the biggest hospital mergers completed last year were the deals made between Atrium Health and Advocate Aurora Health and between Intermountain Healthcare and SCL Health.
Photo: Dmitrii_Guzhanin, Getty Images
