Butler Health System nearly breaks even, despite increased expenses
Butler Health System, part of the Independence Health System, is close to breaking even, after multiple successive quarters of losses due to the combined impacts of the COVID-19 pandemic and inflation.
“We are pleased that the financial results reflect continued, ongoing work and progress on our turnaround plan,” said Tom Albanesi, chief financial officer of Independence Health System. “We have made meaningful progress.”
For the first quarter of 2025, Butler Health System reported an operating loss of $2.69 million. That marks an improvement over the loss of $6.78 million the health system sustained over the same three-month period a year ago.
“The improvement in operating results is predominantly driven by financial improvement initiatives in payor rate negotiations, an increase in discharges, and cost reductions, partially offset by higher utilization of (temporary) physicians and medical supply inflation,” the report reads.
The improved figures were driven largely by an increase in revenue to $124.56 million, a jump from the $113.53 million the health system made in the equivalent three-month period last year.
In its report, Independence Health attributes the rise in revenue mainly to increases in payor rates, or the amounts that insurance companies and others reimburse healthcare providers.
However, any gains in revenue were partially offset by a year-over-year increase in expenses, from $120.31 million to $127.25 million.
“The increase in expenses was due to salary and supply inflation, as well as increased utilization of (temporary) physicians due to vacancies, partially offset by cost reduction initiatives,” the health system notes in the report.
Although Butler Health System’s financial results are trending in the right direction, Independence Health is also looking out for the possibility that recently-imposed tariffs from the Trump administration may undo some of that progress.
“We have frequent communications with our suppliers regarding tariffs,” Albanesi said. “While it’s a constantly changing dynamic, we are assured that supply chain and related costs are secured for the next one to two years.”
Due to the continued losses, Butler Health System’s days of cash on hand — a key metric for bondholders — dropped from 106.4 a year ago to 97.6.
Butler Health System’s report lists two sets of numbers in its quarterly financial statements: the obligated group, which is used by lenders; and the consolidated group, which is expanded to include entities such as the Butler Health System Foundation. The numbers above reflect the consolidated group.
Butler Health System merged with Excela Health, based in Westmoreland County, at the start of 2023 to form Independence Health System. However, both sides of the merger are still filing separate financial reports.
“We remain committed to our mission to deliver expert care to the communities we serve while securing the long-term strength and stability of our organization,” Albanesi said.
