John Sphon named new CEO at Excela as rating agency downgrades bonds

John Sphon, a longtime Excela Health executive, was named CEO of the Westmoreland County hospital and health system Tuesday.

Sphon’s appointment followed the announcement five days ago that Moody’s Investors Service had downgraded $63 million in outstanding Excela bonds from A3 to Baa1.

In a statement on the downgrade, Moody’s analysts cited Excela’s “multi-year trend of weak margins and a significant miss to budget in fiscal 2019.”

The downgrade comes as Allegheny Health Network and UPMC, the two Pittsburgh-based health care giants, continue to encroach on Excela’s market. The small health system is the primary provider for 350,000 people in Westmoreland County through Westmoreland, Latrobe and Frick hospitals as well as a variety of out-patient treatment centers and affiliated businesses.

Sphon, 62, of Greensburg, took the helm as acting CEO last spring after Excela announced the abrupt departure of former CEO Robert Rogalski and COO Mike Busch.

Hospital officials said Sphon’s appointment Tuesday was the culmination of a national search that began last spring.

Excela is the county’s largest private employer. Recent reports pegged its total staff at about 4,700 employees.

Sphon has been with Excela and its predecessors for more than 35 years. He previously was president of Excela’s MedCare Equipment Company.

At Excela’s annual meeting in June, he said the health system was poised to turn the corner on profitability in the 2020 fiscal year, after two years of multi-million dollar losses.

Recently, he directed a major expansion of cardiac services at Excela, saying it was necessary to stem the flow of county residents seeking advanced cardiac care at Pittsburgh facilities.

Sphon is a seasoned and accomplished health care executive, said Teresa Petrick, chair of Excela’s Board of Trustees.

“John has demonstrated a consistent track record of significant success in his over 30 years in the health care sector. He is highly skilled in such areas as business development and operations, establishing and nurturing effective physician relationships and employee engagement. These attributes will be crucial to Excela’s success and vitality going forward,” Petrick said.

His appointment as the third CEO since the three hospitals merged in 2004 marks the third time Excela’s board has looked to a local candidate to lead the health system. In 2004, Excela tapped David Gallatin, who was CEO of Westmoreland Hospital prior to the merger. Rogalski was a member of the Excela board of trustees when he was named CEO in 2009.

Sphon attended Indiana University of Pennsylvania, where he received both his undergraduate and graduate degrees. He is on the board of directors of the Economic Growth Connection and a member of the Central Westmoreland County Chamber of Commerce.

Excela officials said the health system saw improvements in areas such as length-of-stay and emergency room time from arrival to discharge, as well as gains in utilization and financial performance during Sphon’s tenure as acting CEO.

A recent disclosure to the bond market reported that Excela saw increases in patient volume and financial performance and reduced operating losses from 2.9% to 0.8% during the first three months of fiscal 2020, compared to the same period last year.

Sphon said he hopes to build on those metrics.

“We are gaining momentum and making progress in key areas of our operations. I look forward to us continuing to secure and enhance Excela’s position as the preeminent provider of health care in our region, and to provide the most effective and efficient care we can for the patients we serve,” he said.

Sphon said the recent bond downgrade was not unanticipated.

“We may have been disappointed, but we weren’t surprised. It was based on several years of prior experience. But I’m optimistic about our future,” he said.

The new CEO, a Greensburg native who is married and has one adult son, said he has deep local connections beyond hospital walls.

“I still have family here within Westmoreland County,” Sphon said. “I have a vested interest in Excela, not just from a personal perspective, also from a community perspective.”