Exclusive: Butler Memorial could be ‘key hub’ for medical care in WVU Medicine merger
Butler Memorial Hospital will be a critical component of the combined forces of Independence Health System and the West Virginia University Health System, if a proposed merger between the two entities goes through next year. The merger was publicly announced on Wednesday, Nov. 19.
According to executives from Independence Health, as part of the merger proposal, WVU Medicine has agreed to devote resources to Butler Memorial Hospital and make a “tertiary hub” for Western Pennsylvania for its potentially soon-to-be-merged system.
“WVU Medicine recognizes that they need to establish key hubs in Western Pennsylvania,” said Ken DeFurio, CEO of Independence Health during a meeting Friday, Nov. 21, with the Butler Eagle. “People aren’t going to travel to Morgantown for those services. Frankly, they don't have the capacity at their facilities in Morgantown to take those patients, even if they wanted them.”
In addition to DeFurio, the meeting included Matt Schnur, president of Butler Memorial and Clarion hospitals, and Dr. Michael Fiorina, chief medical officer of Independence Health.
DeFurio said patients always have the first choice of what hospital they prefer to be taken to — including hospitals in Pittsburgh.
“It will be rare that some people need a service at a hospital that we don’t have at Butler,” DeFurio said. “Butler will be a key hub for the organization, with a very, very high level of services, which it already has. It will be rare that somebody needs to go elsewhere for care.”
At the Wednesday news conference, West Virginia University Health System said it will invest $800 million over five years to modernize the system with $200 million earmarked for capital improvements.
In the letter of intent between both sides of the proposed merger, WVU Medicine has pledged to commit a minimum of $600 million to “strategic capital investments” across Independence Health system.
Of that amount, $165 million will be targeted specifically at Butler, with an aim toward upgrading the emergency room and OB-GYN department at Butler Memorial Hospital, along with outpatient sites.
Another major component of the proposed merger is an overhaul of the system’s electronic health records (EHR). According to the letter of intent for the transaction, WVU Medicine has committed $80 million to install a new health records system from Epic Systems.
“Epic is the platform for all communication. Communication between doctors and doctors, doctors and patients, patients and lab results, all that,” DeFurio said. “Of the academic medical centers across the country, you’d probably be hard-pressed to find one that doesn’t use Epic. It’s widely viewed as the premier EHR system.”
Of great importance to Independence Health System is that, if the merger is approved, WVU Medicine would assume all of Independence’s current debts.
The debts have been a source of concern for Independence Health since the pandemic. Both Butler and Excela — the separate health systems that merged together at the start of 2023 to form Independence, but still file separate financial statements — have had their credit ratings downgraded several times since 2023.
“They’re going to guarantee the debt of the entire Independence Health System,” DeFurio said. “If you had somebody come along and say, ‘How about we pay off your mortgage and then make another few hundred thousand dollars of investment into your house, what would you think about that?’ That's what's going on here.”
Another motivation for the merger, according to DeFurio, was the ability to partner with Peak Health, a nonprofit health insurance provider partially owned by WVU Medicine. Unlike its competitors, UPMC and Allegheny Health Network/Highmark, Independence Health System is not currently integrated with a health insurance provider.
“WVU Medicine is an integrated finance and delivery system,” DeFurio said. “So we get entry into that structure by way of our relationship with WVU Medicine.”
DeFurio said Peak Health is different from both the UPMC Health Plan and Highmark Insurance, as well as other competing for-profit insurance providers.
“Most insurance companies of any type, including health insurance, are profit-generating mechanisms,” DeFurio said. “(Peak Health views) it as a way to control the costs of health care and provide an affordable, solid product that gets people the lowest cost with the highest quality of care.”
If the merger goes through, an added benefit for Independence Health employees and their dependents will be the offer of tuition assistance at West Virginia University.
According to Fiorina, most of the physicians and medical staff are excited about the prospects of becoming part of West Virginia University’s respected health network, although there were some who expressed uncertainty.
“Whenever there’s a void of information, sometimes people fill that void with their fears,” Fiorina said. “But for every one person who’s hesitant, there’s 10 to 15 who are just so excited about what the possibilities are going to be.”
Butler Health System recently introduced a three-year family medicine residency program, which is currently in the middle of training its inaugural class of four students. Similar programs are in operation at Clarion and Latrobe hospitals.
Fiorina said the proposed merger would enhance programs.
“WVU Medicine has a well-established graduate medical education department,” Fiorina said. “I've already reached out to them and they have given us a lot of support in saying that they want to collaborate with the great work that we're doing. The mood that we have here at Independence is extremely excited about what the possibilities are going to be.”
DeFurio expect to have a “definitive agreement” between both parties fully hashed out by the end of June. Afterward, the deal will require approval from regulatory bodies at both the state and federal level.
“Two bodies have to approve this: the state attorney general’s office in Pennsylvania and the (Federal Trade Commission) at the federal level,” DeFurio said. “The FTC requires 30 days. The state requires 90. That gets us to October.”
