Independence Health System lays off 53 employees

Independence Health System laid off 53 employees this week, bringing the total number of positions eliminated this year to 226.

The changes come in the wake of significant financial losses and a financial credit rating downgrade for part of the health system.

Formed by the merger of Butler Health System and Westmoreland-based Excela Health in January, Independence operates five hospitals: Butler, Clarion, Frick, Latrobe and Westmoreland.

According to spokesperson Tom Chakurda, the recent layoff of 53 employees is less than 1% of the system’s overall workforce of 7,300. It is the top private employer in Westmoreland County, largest employer in Butler County and the largest health care employer in Clarion County.

Chakurda described the layoffs as regrettable.

“These actions are a reflection of our ongoing and necessary initiatives to address and overcome the economic challenges facing both our system and the health care industry as a whole,” Chakurda said in a statement. “We are confident they will result in Independence Health System maintaining its position as one of the premier providers of care in western Pennsylvania.”

The vast majority of the 226 positions eliminated this year have been through “resignations, retirement and the elimination of vacant positions,” Chakurda said.

Independence reported combined losses of more than $62 million over the nine-month period ending March 31, according to disclosure reports.

Also this week, credit agency Fitch Ratings downgraded Butler Health System’s rating three notches from A to BBB in response to operating challenges experienced by the new system in recent months. Excela and Butler Health are rated separately.

In February, President and CEO Ken DeFurio acknowledged in an internal letter that the newly combined system was struggling financially and alluded to an upcoming “significant expense reduction plan.” Thirteen management-level staff members were let go in March.

During an interview this month, DeFurio expressed confidence the system will be able to turn its finances around and “come out of this in a very strong place.”

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

“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.”