Independence Health System’s financial picture improved markedly in the first full fiscal year of its existence after the January 2023 merger of Butler Health System and Excela Health to make one of the largest hospital and provider networks in western Pennsylvania.

Independence Health System reported net income of -$26.3 million in the fiscal year ended June 30, 2024, compared to a loss of $63.4 million in the previous year, according to data provided by the health system. Net patient revenue was $1.16 billion in fiscal year 2024 compared to $1.05 billion in fiscal year 2023.

It's the fourth-biggest health system in the region, according to Pittsburgh Business Times research.

The health system also breaks out the Butler and Excela financials for bondholders, and both saw significant improvement in the year ending June 30, 2024. Separate filings are required under the terms of the hospital system’s existing debt agreement. The health systems together had struggled through Covid and its aftermath, and had put into place strategies to improve its finances including some layoffs.

“Independence Health System’s financial results for the quarter and fiscal year ended June 30, 2024, show significant improvement," the system said in a statement. "It is a reflection of our collective efforts to address and overcome the financial challenges of our industry. While encouraged by this progress, work remains to sustain and enhance the success already achieved."

Excela saw its annual operating loss drop from $36.2 million in 2023 to $11.6 million in 2024, and its operating loss margin was -1.7% in 2024 compared to -5.5% in 2023. The system said its improvement was due to cost reduction, negotiations with insurance companies and strategic volume growth as part of the system’s strategy. Revenue was up 5.2% to $698.3 million, thanks to higher reimbursements from some payors and a 3% jump in hospital admissions and observations overall.

Admissions rose from 5,251 in fiscal year 2023 to 5,716 in 2024, although observations declined from 873 to 655 during the same period. Average length of stay was 4.42 days compared to 4.57 days, but both inpatient surgeries (988 versus 982) and outpatient surgeries (4,675 versus 4,404) rose compared to the year before.

Butler Health System — which includes Butler and Clarion hospitals as well as associated providers — also saw improvement. Its operating loss was $28.6 million in the fiscal year ended June 30, 2024, down from $32.4 million a year earlier. It had a $22.7 million deficit over expenses during the period, down from $39.1 million in fiscal year 2023. Revenue was $463.8 million in 2024, up from $450.9 million a year earlier.

The system saw 11,950 total discharges between July 1, 2023, and June 30, 2024, up from 11,356 the year before. Discharges were up sharply in both medical/surgical and psychiatric cases at Butler Memorial Hospital, by far the largest of the two BHS hospitals. There were more inpatient surgical procedures at Butler than the year before, and fewer outpatient surgeries at Butler.