Thomas Jefferson University plans to cut 500 positions through attrition, freeze pay of top executives and stop retirement plan contributions for a year as the medical system, one of Philadelphia’s largest employers, struggles to stem losses.
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Jefferson Health, which expanded from three to 14 hospitals from 2015 to 2018, has been hit extra hard by COVID-19 shutdowns that have delayed elective surgery.
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“The reality is, unless addressed, the pandemic will dramatically affect our ability to fulfill our mission,” wrote Stephen K. Klasko, president of the university and chief executive at Jefferson Health, in an internal email to staff. Jefferson logged an operating loss of $298.71 million in the year ended June 30 even after it received $320 million in government grants to help it withstand the financial devastation of COVID-19.
Still, Klasko adds that he is determined to keep upgrading the facilities and remain competitive even if it means leaving hundreds of jobs unfilled. Jefferson employs more than 32,000 people and is the city’s second largest employer after the University of Pennsylvania.
After enduing steep losses in the last fiscal year, the system missed bank lenders’ profit targets and canceled a deal to acquire Fox Chase Cancer Center. So a Jefferson committee charged with “enterprise turnaround and transformation” has recommended these cuts, and Jefferson is executing them, Klasko told staff:
– An effective hiring freeze that will “reduce our headcount by 500 (to) 600 fulltime employees” by leaving open jobs unfilled and “reassigning work to already busy colleagues.” Klasko did not say if any current employees will be terminated.
– “Significant reduction” — how much, he didn’t say — in compensation to Klasko and other senior executives
– “Consolidation of services and restructuring of positions” in unnamed departments.
– Jefferson will temporarily suspend employer contributions to all retirement plans from Jan. 1, 2021 through Dec. 31, 2021 for all Jefferson employees, saving $140 million.
– A pay freeze, will be instituted, including a ban on merit increases normally paid in January.
The cuts, Klasko added, will “preserve at least 2,000 [to] 2,500 jobs.” It will also allow Jefferson to continue the empire-building “capital investments” that Klasko believes will keep Jefferson “state of the art” competitive amid “the reimagining of healthcare, education and discovery.”
So Jefferson will continue building its planned hospital towers in New Jersey, and updates to information technology and other infrastructure will continue at its Northeast Philadelphia and Abington hospitals and at the Specialty Care Pavilion at 1101 Chestnut St.
“This IS our future and we must stay the course!!,” Klasko added for emphasis. It’s all “for the greater good of our fellow colleagues,” he wrote, urging prospective critics to “think of the whole.”
Workers with questions were advised to call the HR Service Center online, 215-503-4772.
Klasko blamed COVID-19 restrictions, which he said were the most disruptive event of his career, for Jefferson’s weak finances.
“Prior to the pandemic, we were on a path to see a record number of patients and enroll a record number of students,” he wrote. After the virus is overcome, “we will put the financial struggles of 2020 well behind us and continue that growth trajectory,” emerging “a stronger institution.”
Jefferson has been an expansion tear, going from from three to 14 hospitals from 2015 to 2018. The system is currently in federal court seeking to take over four more hospitals of the Einstein Healthcare Network. The Federal Trade Commission is seeking to block the takeover, saying it will raise hospital prices in the area.
If it succeeded in taking over Einstein, a top Jefferson executive said it would shut the emergency department and eliminate the 60-bed inpatient program at Einstein’s small Elkins Park campus, replacing them with expanded doctors’ outpatient offices and turning over more space to MossRehab, which shares the grounds.
Jefferson would also shift some highly complex and rare types of surgery from Einstein’s main hospital on Broad Street to its flagship hospital in Center City or to Abington Hospital, the executive said.
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