Excela Health reports more financial losses, predicts return to profitability in 2020

John Sphon, acting CEO of Excela Health, said the Westmoreland County health system is poised to reach profitability in fiscal 2020, following two years of multimillion- dollar operating losses.

“We look at this coming year as a year of transition,” Sphon said Monday at Excela’s annual meeting at Saint Vincent College. “The problems didn’t occur overnight, and they won’t be solved overnight.”

The health system is crafting a new strategic plan after the departure of its two top executives this year. It posted an operating loss of $9.8 million for the nine months ending March 31, after a $1.7 million loss during the same period last year.

Meanwhile, patient admissions and observation cases at the local health system that encompasses Frick, Latrobe and Westmoreland hospitals decreased from 23,127 in the nine months ending March 31, 2018, to 22,107 during that same period in 2019.

Sphon, a longtime Excela employee, took the helm at the health system in April when Excela announced the abrupt resignations of longtime CEO Bob Rogalski and COO Mike Busch.

That announcement came weeks after Excela agreed to outsource patient accounting and billing operations to Optum 360, a division of United Healthcare. In that deal, Excela shifted 350 of its employees to Optum’s payroll.

Teresa Petrick, board chairwoman, said Excela is conducting a national search for a new CEO in conjunction with SG2, a Chicago-based consulting firm that is assisting in development of Excela’s new strategic plan.

Asked if Sphon is a candidate for the permanent post, Petrick said: “We hope he will be. The board is very interested in his desire.”

Two prior Excela CEOs, Rogalski and David Gallatin, were recruited from inside the organization. Rogalski was a board member and Gallatin, his predecessor, was CEO of Westmoreland Hospital when the merger that created Excela occurred.

Petrick predicted the board will name a permanent CEO and deliver its new strategic plan this fall.

“The plan will be 100% Excela developed and delivered,” Petrick said.

As it charts a plan for the future, Excela is scrambling to meet its staff needs.

Faced with competition for staff in areas such as housekeeping, food services and custodial services, Sphon said the hospital will increase compensation for 250 positions in those categories. He declined to say what that will cost.

Sphon said Excela is well-positioned to grow and enhance its services in cardiology, neurosciences, orthopedics, cancer care and oncology and women’s health services.

Excela’s ongoing effort to recruit such specialists is bearing fruit, Petrick said.

“We have two cardiovascular surgeons who are well-known in the area coming on board this summer,” she said.

Officials believe such moves combined with national honors Excela has received for its family practice residency program and a citation from the Society of Critical Care Medicine for recent renovations to its ICU will send a message to the community that it is committed to quality care.

Sphon said the hospital also is pursuing magnet recognition for nursing, the so-called gold standard designation for nursing care standards from the American Nurses Credentialing Center.

“We’ve submitted the application and are awaiting a site visit,” Sphon said.

Sphon said Excela will continue to accept all major insurers in an effort to be accessible to the 350,000 people in its service area.

Excela’s open door policy contrasted sharply with the battle between local health care giants UPMC and Highmark and UPMC’s threat to cut off in network care to Highmark members beginning June 30. On Monday, UPMC and Highmark announced an 11th hour agreement to provide Highmark customers access to UPMC facilities for the next 10 years.