After eight years of growth, Jefferson president Stephen K. Klasko announces retirement
Under Klasko's leadership, Jefferson became the largest health system in the Philadelphia region in terms of the number of hospitals owned.
Stephen K. Klasko, president and CEO of Thomas Jefferson University, said Thursday that he will retire at the end of the year, completing an eight-year run in which he oversaw a massive expansion of the Jefferson hospital network.
Klasko, 67, an obstetrician and gynecologist, led the organization into a growth spurt that saw its empire increase from three hospitals to 18, an expansion that analysts said should put it in a better place to compete in an increasingly difficult and turbulent marketplace. He revealed his plans a little more than a week after the nonprofit completed the acquisition of Einstein Healthcare Network.
Jefferson posted a combined $7 billion in annual revenue in the fiscal year ended June 30. With the addition of Einstein on Oct. 4, Jefferson now employs 40,000and operates 3,600 hospital beds from Lansdale to Washington Township, Gloucester County. Its flagship is the Thomas Jefferson University Hospital in Center City Philadelphia.
There have been hard times. In the last two fiscal years, as the pandemic struck, Jefferson Health would have lost a whopping $772 million were it not for $480 million in federal CARES aid. And earlier this month, a nursing assistant shot and killed a colleague on the ninth floor of the anchor hospital.
One of Klasko’s goals was to build a hospital network big enough to spread costs widely among a larger pool of patients so it can thrive by controlling expenses as insurers move away from the decades-long practice of paying separately for discrete services.
Klasko’s retirement has been in the works since July, he and board chair Patricia D. Wellenbach said. Klasko, who is a Philadelphia native, said the time was right for him to start the third phase of his career, which started during his days as an obstetrician delivering 2,000 babies and saw him move through a series of leadership positions in academic medicine, culminating in his 2013 appointments as head of both the academic and business sides of Jefferson.
What he wants to do next is “be part of that whole national transformation of health care in a different way. I think there will be a lot of opportunities in that realm,” he said in an interview.
A preview Klasko gave was that he is working on a book about how technology can help everyone be healthy, not just rich. He often speaks of his ties to Silicon Valley and is on the board of a company that raised $500 million last year to buy health-care technology companies.
He declined to discuss the Oct. 4 fatal shooting, citing the ongoing investigations. He did say: “Our staff has been extraordinary.”
Experts said Klasko led an extraordinary consolidation of health systems at Jefferson, which, starting in 2015, acquired Abington Health, Kennedy Health System, Aria Health, Magee Rehabilitation Hospital, and two surgical hospitals — before adding Einstein on Oct. 4 after overcoming an antitrust challenge by the Federal Trade Commission.
“There’s been no one that’s been able to put together the kind of system that Steve’s put together in this short a period of time,” said Joshua Nemzoff, a health-care investment banker in New Hope. “As someone who does this for a living, I’m just amazed that he was able to do it.”
The last of Klasko’s deals is expected to be completed by the end of the year. That’s the purchase of Temple University Health System’s 50% stake in Health Partners Plans Inc., a nonprofit Medicaid insurer also known as HPP. That deal would give Jefferson $8.1 billion in revenue. The price has not been disclosed.
Getting that many deals done is hard, said Dan Grauman, chief executive of Veralon, a Philadelphia health-care consulting firm. The next phase, which Jefferson has already started, is even harder, he said.
That’s figuring out “how you optimize operations, how you make it work the best, how you integrate, and how you make it all work well operationally, clinically, and, ultimately, financially,” Grauman said.
“Every hospital and health system is struggling around some of the economic challenges. We’ve proven that we are nimble and can manage through that, and I think we’re going to continue to prove that,” said Wellenbach, the Jefferson chair.
Jefferson said last week that even with the acquisitions of Einstein and Health Partners its financial plan should enable it to keep its “A” credit rating, which is solidly in the middle of investment-grade ratings, as opposed to lower ratings that are considered speculative.
“We feel very bullish on that financial plan, and we’re going to deliver on it,” Wellenbach said.
Jefferson said that H. Richard Haverstick Jr., an emeritus member of Jefferson’s board of trustees and a retired Ernst & Young partner, will serve as interim president and CEO, as of Jan. 1.
Through next June, Klasko will remain an adviser to Jefferson’s board.