Einstein and Jeff plan to separate

The Philadelphia region's largest employer - Jefferson Health System - is getting smaller.

Jefferson and Albert Einstein Healthcare Network announced yesterday that they were ending their 10-year relationship. The split should be final by midyear.

David Simon, vice president of payer relations and general counsel for Jefferson, described the breakup as "very amicable" so far. He said boards for the two systems concluded that "the two organizations can best serve their respective communities by separating."

He and Alfred Putnam, chair of the Jefferson Health System board, declined to say why that would be so. Richard Braemer, chair of Einstein's board, did not return a phone call.

The change will require approval from the Pennsylvania Attorney General's Office and Orphans' Court, Simon said. That's because both Jefferson and Einstein are nonprofit health systems.

He and Penny Rezet, vice president and general counsel for Einstein Healthcare, said no facilities will close as a result of the split and there will be no staffing reductions.

Two area health-care consultants said the change was unlikely to affect patients or employees.

Jefferson and Einstein will continue to pool their resources for physicians' malpractice insurance, and Einstein plans to maintain its academic affiliation with Thomas Jefferson University, Simon said.

Jefferson Health System, which is based in Radnor, includes Thomas Jefferson University Hospital, Einstein, and three other entities: Frankford Health Care System; Magee Rehabilitation Hospital; and Main Line Health Inc., the parent of Bryn Mawr, Lankenau, Paoli Memorial and Riddle Memorial hospitals. The system, which was created in 1995, has 27,895 employees and 3,761 beds.

The Einstein system includes Albert Einstein Medical Center, Belmont Center for Comprehensive Treatment and MossRehab. It has 7,013 employees and 1,237 beds.

Its agreement with Montgomery Health System, the parent of Montgomery Hospital in Norristown, to build a hospital near Norristown will not be affected by the split, Rezet said. The hospitals, which announced that deal in January 2006, have yet to name the site for the new hospital.

Rezet said Einstein does not have an agreement to align with other area health systems. Einstein, she said, is in "fine fiscal condition." According to the most recent report from the Pennsylvania Health Care Cost Containment Council, Einstein hospital had an operating margin of 2.23 percent in fiscal 2006 on operating revenue of $463 million. The average margin for the region was more than 3 percent.

Alan Zuckerman, president of Health Strategies & Solutions Inc., said the two organizations may have clashed over Einstein's Montgomery County expansion plans. Simon denied that.

But the primary problem, Zuckerman said, may have been that Einstein and Jefferson just operated differently. "There's probably an overarching reason, which is, it was always a poor cultural fit," he said. "I think that's been a problem from the get-go."

Tension is common in big systems, he added, but the parties try to stay together because breakups are hard to do. "It's expensive and painful, so they don't happen that often," Zuckerman said.