Butler Health, Excela Health close merger forming 5-hospital system in western Pennsylvania

Updated Jan. 4

Butler Health System and Excela Health finalized their merger on January 1, creating a new five-hospital system in western Pennsylvania, according to an announcement released this week.

The deal had been unveiled in June but ramped up in November when the two organizations signed a definitive agreement to merge. That definitive agreement and other legal documentation had already been submitted to state and federal government for regulatory review, the systems said. 

“Over the past year, both Boards invested an immense amount of work, time and energy to determine if this merger made sense," Ken DeFurio, the former president and CEO of Butler who now holds the same roles at the new unnamed entity, said. "We now look forward to implementing the opportunities that we’ve identified and discovering new ones.”

The new organization will serve a population of 750,000 western Pennsylvania residents, employ roughly 7,300 people and include more than 1,000 physicians and practitioners. It is expected to generate $1 billion in revenue annually, per media reports

Joh Sphon, former CEO of Excela, is set to retire in March but will stay on in an advisory capacity for "several months" and remain as a trustee thereafter. 

The organization said it plans to release more information about the new system, including a name, in the coming weeks. It will also take time to integrate and coordinate the now-joined entities, the system said.

“It is important to underscore that a merger process of this magnitude is very complex and requires an approach that is highly thoughtful and diligent,” DeFurio said. “We can now continue our focus on integrated governance, executive structure and other elements that are key to effective and efficient delivery of care.”

Butler Health System and Excela Health, two health systems based in western Pennsylvania, are planning to merge into a new health system serving the region, the organizations announced Wednesday. 

The systems hope to leverage the merger to scale and be more relevant in the region’s competitive marketplace. The new health system will support five hospitals including Butler, Clarion, Frick, Latrobe and Westmoreland. It is expected to generate more than $1 billion in revenue and employ about 7,300 people, including more than 1,000 clinicians. The total population served will be 750,000. 

“The new system will provide additional services and better access to those services,” Ken DeFurio, president and chief executive officer at Butler Health System, said in a press release. “We are pleased that this partnership amplifies our ability to provide tertiary care, yet remain physician-led and community-focused.”

The deal is pending various approvals, which could take all year, alongside which more specific details like the name of the new system will be agreed upon between the two entities. The entities are culturally aligned with a common vision to transform the sector, they said in the announcement. 

“We can enhance access to care, decrease the cost of care and continue to focus on providing improved experiences and outcomes for patients, John Sphon, chief executive officer at Excela, said in a press release.  

The deal comes amid a reported slowing of healthcare mergers and acquisitions in the first quarter, though larger players are thought to have stable balance sheets.