The good news for Butler (Pa.) Health is that operating margins in fiscal 2024 are expected to improve. The bad news is that such margins are still forecast to be in the red.
Butler Health, which merged with Greensburg, Pa.-based Excela Health to form Independence Health System on Jan. 1, reported a -10.9% margin in fiscal 2023 ending June 30. The system is expecting a margin of -5.1% in fiscal 2024.
Leadership at the system told an investor call that the improved margin will have much to do with what consultants have identified as $64.5 million in financial improvements. Butler contracted with FTI Consulting soon after the merger was complete, CEO Ken DeFurio told the call.
Barring an intervention, Butler Health was projected to lose up to $68 million annually from operations in the next few years and breach days' cash on hand covenants, the company said.
The system reported an operating loss of $43.3 million in fiscal 2023. Its days' cash on hand as of June 30 totaled 109.3, above covenant requirements.
Independence Health is a $1 billion revenue system with five hospitals in Western Pennsylvania.