Editorial: Excela-Butler merger should preserve community focus

Excela Health plans to merge with Butler Health System.

“I think it’s going to make Excela stronger,” said Latrobe city manager Terry Carcella. “The bigger you are, the better you are.”

That’s a little simple, but let’s hope it’s true.

The merger lowers the number of hospital organizations in the area, but it ups the size. Excela is larger in terms of the number of beds and hospitals, with Westmoreland Hospital in Greensburg, Frick Hospital in Mt. Pleasant and Latrobe Hospital combining for a total of 578 beds, 700 physicians and 4,800 employees. Butler brings two more hospitals with 361 total beds to the table with Butler Memorial Hospital and Clarion Hospital, as well as 270 providers and about 3,000 employees.

The annual revenue of the two are comparable, with Excela bringing in more than $500 million for the previous nine months and Butler topping $400 million for the third quarter of fiscal year 2022.

This definitely combines the assets of the systems. Unfortunately, it also adds to the deficits. Excela has $10.5 million in losses over that nine-month period. Butler had $8.2 million in losses for the cited quarter.

“We believe strongly that our new partnership will extend our intellectual and financial capital,” John Sphon, Excela Health chief executive officer, said in a prepared statement. “In doing so, we can enhance access to care, decrease the cost of care and continue to focus on providing improved experiences and outcomes for patients.”

The merger could allow better bargaining. The hospitals could benefit from the ability to make deals and share purchasing. They could split expensive specialities to shoulder the burden together.

But this shouldn’t be framed in terms of competition with the bigger health systems. UPMC and Highmark’s Allegheny Health System will not be intimidated by the merger. This shouldn’t be about bigger being better.

The new five-hospital, largely rural group should be about smaller being better. While larger size will let them share the load, what they need to preserve is the connected and community nature that supports and serves areas the big boys can’t.