The financial issues facing Butler Health System are not uncommon among hospitals across the United States.

Health systems nationwide have been struggling with staffing shortages since the beginning of the COVID-19 pandemic. The shortages have affected patient care and have increased burnout among workers.

In September 2022, median operating margins for our nation’s hospitals and health systems were down by 46% compared to the same time in 2021, according to Deloitte, a global provider of audit, consulting, financial and related services in more than 150 countries and territories.

Deloitte’s 2023 Outlook for Health Care was based on several surveys in which the company polled health plan and health system leaders about their expectations and concerns.

At the same time, the unstable inflationary environment is expected to continue through the year. Only 7% of health system leaders said inflation and affordability issues were not likely to affect them during 2023. Meanwhile, 76% expect it to have a significant impact.

Independence Health System, formed by the merger of Butler Health and Westmoreland-based Excela Health systems earlier this year, laid off 53 workers in late June and has cut 226 positions since January, beginning at the executive level. Butler Health System recently reported losses of $33.1 million for the nine-month period ending March 31.

The two hospital networks still maintain separate financial records.

Reports of layoffs at Independence Health came as the credit rating for the health system plummeted to “BBB,” with Fitch Credit Agency citing “deficit operating and excess losses.”

A BBB rating indicates that expectations of default risk are low and the capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

“Butler financial results through March suggest that its operating challenges have not abated and are exacerbated by inflationary pressures on labor and supplies, but also patient volumes which have yet to rebound to prepandemic levels,” the Fitch report stated.

Even before the merger, Butler Health System was under serious financial pressure tied in large part to labor and supply shortages in the medical field as well as rampant inflation driving prices through the roof. For fiscal year 2022, the health system suffered an operating loss of $14.6 million.

Hospitals and health systems likely will face continuing financial challenges. according to data from Deloitte.

We have confidence Independence Health System will be able to ride out this stretch of financial turbulence and keep Butler Memorial Hospital a vital source in providing health care to the residents of Butler County.

— JGG