The CEO of the merged Excela Health and Butler Health systems is committed to keeping the organization’s five hospitals operating, despite currently enduring millions of dollars in losses.

“We are taking a look at all the assets across the system. Every one of the five hospitals is very important to its community,” Ken DeFurio told the Tribune-Review. “I don’t know exactly what their services look like down the road, but they will be there in some form, continuing to take care of the community. That’s what we’re working through — it really is a very important discussion with the board, with the medical staff and with senior leadership in what makes sense moving forward.”

DeFurio spoke with the Trib late last week about the newly named Independence Health System, his vision for its future and his love of community health care.

Independence Health operates five hospitals: Butler, Clarion, Frick, Latrobe and Westmoreland. Each has a place in the health system’s future, although they could serve as home to certain types of specialty care, DeFurio said.

“We really are thinking about ‘What should be doing, where should we be doing it and where does our best talent lie?’ so that we have a system that is efficient and well thought out and rationalized in a way,” he said. “We might decide that one particular hospital is going to be a center of excellence for a particular type of care, and we make sure that we have planned out the service line, aligned the service line and the physician leadership within that specialty, so that they’re taking care of patients across this broad geography. When that high, high level of care is required, everybody knows how to access it, where it is, and what we are doing.”

He said he also expects to see an expansion of outpatient facilities as Independence grows.

Independence reported $62 million in losses over the nine months ending March 31, according to disclosure reports released this spring. Still, DeFurio said he remains optimistic.

“I don’t lose sleep over ‘Are we going to be able to get this thing turned around?’ ” he said. “I am very confident that we are going to come out of this in a very strong place.”

DeFurio said that while the company’s losses were more significant than initially predicted, Independence is on track to address them.

“What has happened is the finances got tightened a little bit more over the winter months, and the turnaround is just a bit bigger than what we knew it was then,” DeFurio said. “The challenges are just a little bit steeper now than they were. But we’re dealing with them.”

After DeFurio noted in a late February letter to staff that the system would undergo a “significant expense reduction plan,” 13 manager-level staff members were laid off in March.

Independence is still looking at “every expense and every cost area of the entire system,” including workforce and labor, service contracts, auditor and lawyer costs and pharmaceuticals, DeFurio said.

The health system has 7,300 employees and more than 1,000 physicians and advanced practice providers. It is the largest employer in Butler and Westmoreland counties.

Grounded in community

DeFurio, 59, spent the bulk of his career at Butler Health System and said overseeing community hospitals is “kind of in my DNA.”

“I have always gravitated towards the community setting. I want to be in a place where the medicine is as good as anywhere, and the care is as good as it could be anywhere. Certainly, the Excela Health and the Butler Health systems have proven that that is entirely possible,” he said. “It’s a part of me and who I am.”

DeFurio joined Butler 37 years ago as a respiratory therapist, when he sought out a community hospital setting directly out of college. Originally from Indiana, Pa., he now lives in Renfrew, Butler County, and splits his time between offices in Greensburg and Butler.

“Having trained at mostly academic medical centers, I preferred the community hospital setting,” he said. “A long time ago, I graduated, and I literally called all of the larger community hospitals that surrounded Allegheny County, and I was looking for a job. The first one that responded and had a position and I got the job happened to be Butler.”

DeFurio earned a Bachelor of Science in respiratory therapy from Indiana University of Pennsylvania and a Master of Business Administration from the University of Pittsburgh. Before taking on leadership of Independence, he served as Butler’s president & CEO for 17 years.

Path of a partnership

The idea to merge Butler and Excela, like many things that came out of the pandemic, emerged on a Zoom call, DeFurio said.

He and his friend, former Excela CEO John Sphon, were swapping stories about their respective health systems’ progress, struggles and paths through the pandemic in a conversation two years ago.

“The idea became, does scale matter? Would we be able to do some things together that are probably not as likely if we continue to go it alone?” he said. “We both introduced that idea to our respective board chairs and board leadership, and they agreed that we should get together and at least talk.”

The merger was announced officially a year ago in June 2022, and the two systems entered into a definitive agreement in November.

Since then, Independence has seen more losses than expected, DeFurio admitted.

“The last quarter we had, as we headed into the end of (last year,) was the third quarter of 2022,” he said. “We knew based on those financials that’s where we were, and in large part, that’s what the board used to make their decisions to proceed. As it turned out, the final quarter of the year and the beginning of this year were a bit more challenging, even, than what we were facing then.”

Leadership at Independence looked to other health systems that had gone through similarly sized mergers as guides throughout the merger process. According to DeFurio, Independence has moved “a little bit faster” than its role models facing similar challenges.

“While we have similar cultures in a lot of ways, the fact of the matter is (Excela and Butler) are still two different organizations,” he said. “People don’t know each other, and they’re getting to know each other now. You’re bringing two organizations together, and so there’s that classic storming-forming-norming-performing cycle that you go through. We’re going through that — any organization does.”

Looking ahead

As the system moves forward, a lot is unknown, but DeFurio can confirm a few things. For one, Independence does not plan to have a centralized headquarters.

“Instead of having a centralized office somewhere where the senior managers report to work, we have been all on the road, getting ourselves out there into the various facilities that we have,” he said. “For me personally, I have an office here at Westmoreland Hospital and at Butler Hospital, but I also am spending my time at the other three hospitals as well as our major outpatient locations. For the foreseeable future, and I don’t see this changing, we will continue to manage in a way that we are visible and present across the system, and we aren’t doing this out of some central office somewhere.”

DeFurio says he hopes the system will be moving in a positive direction by the end of this year and the beginning of 2024.

“Our mission does not say we’re here to make money,” he said. “The work over the course of the summer here and into the fall is to work very closely with the medical staffs across the new system, so that all of our physicians are meeting one another, across specialties, they’re getting to know one another.”

He hopes that in the future, patients will hear the name Independence Health and think of “personalized care, high-touch, high-tech, as close to home as possible.”

“So many of our medical staff and our employees are from the community and in the community. You are working with your family, friends and neighbors, and you are caring for your family, friends and neighbors,” he said. “It’s a very personal activity in that regard.”

Copyright ©2025— Trib Total Media, LLC (TribLIVE.com)