Larry Kaiser is stepping down as chief executive of Temple University Health System after a more than eight-year tenure marked by high-profile moves to bring financial stability to the nonprofit by expanding its reach beyond North Philadelphia, where it is the de facto public hospital.
Kaiser’s ambitious but long-shot effort hit a wall last year when Temple University announced a restructuring that included the proposed sale of the Fox Chase Cancer Center, acquired in 2012, and a renewed focus on being financially healthy while serving the poor population around its North Philadelphia base.
Effective Sept. 30, the health system’s chief restructuring officer, Stuart McLean, will become acting CEO of the health system, Temple said Tuesday. Kaiser is also leaving his position as the dean of Temple’s Lewis Katz School of Medicine. John M. Daly, a former dean, will be the interim dean.
Through the end of the year, Kaiser will focus on the health system’s restructuring, which includes the pending sale of Fox Chase and Temple’s interest in Health Partners Plans, which manages Medicaid and Medicare benefits for its members, to Thomas Jefferson University.
Temple president Richard M. Englert praised Kaiser’s work at the university’s health system.
“When he came to Temple, he aggressively tackled the monumental challenges facing Temple University Health System, being both a comprehensive academic medical center and a critical safety net for our North Philadelphia community,” Englert said in a statement.
Philadelphia is the largest U.S. city without a public hospital to care for the indigent. Many of Temple’s patients have Medicaid insurance, which pays poor rates compared with commercial insurance.
Daniel J. Hilferty, president and chief executive of Independence Health Group, which owns the largest health insurer in the region, said Kaiser was always a partner trying to do what was best for the communities that Temple serves.
“He was a very effective steward of not only the institution, but of thousands of our members who went through those doors on an annual basis. I’m a huge Larry fan,” Hilferty said.
Kaiser, who came to Temple in 2011, said it was a good time for him to move on. “With the sale of Fox Chase and the sale of our interest Health Partners, it’s really a different job,” he said in an interview.
Kaiser, 67, said he still has a lot of energy, but hasn’t decided what he’ll do next. “I’ve got another job in me,” he said.
In addition to acquiring Fox Chase for $84 million, Kaiser added physicians in such advanced areas as robotic surgery and revived Temple’s organ transplant program in a bid to attract patients from the suburbs and even farther afield. Lung transplants were a particular success, with Temple’s volume tops in the nation in 2017 and 2018. Temple University Hospital treated patients with increasingly complex conditions after Kaiser arrived, translating into more revenue.
Kaiser’s strategy had significant success, in 2015 ending a period of annual losses in six of the seven previous years.
But too few patients with commercial insurance came from the suburbs to allow Temple to strengthen its balance sheet, so that it could adequately invest in Fox Chase, the health system’s most profitable unit. From 2011 through 2015, there were gains in patients with higher-paying commercial Blue Cross insurance, but since then those numbers have tumbled.
Another goal of Kaiser’s was to participate in the consolidation of the health-care industry, ideally reaching $3 billion to $5 billion in annual revenue, Kaiser said in an interview in 2012, when Temple had about $1 billion in revenue. Revenue totaled $1.85 billion in fiscal 2018, but aside from acquiring Fox Chase, Temple has only watched others find partners. The health system hasn’t yet reported results for the year ended June 30.
“I think as we’ve seen consolidation at Penn and Jeff, we’ve sort of been isolated," Kaiser said. “That’s a challenge, especially for a safety-net hospital.”
As to his permanent successor, Kaiser said he expected the university to make separate appointments for medical school dean and CEO. As to the CEO job, Kaiser said: “With the sale, the health system will become essentially one hospital with a couple of campuses. It’s going to have to be someone committed to serving this underserved population and really trying to maintain a safety-net hospital’s financial viability.”