Jefferson CEO: Expect More Mergers

Dr. Stephen Klasko, president and CEO of Jefferson.

Jefferson has been merger-happy over the past year — and it’s not going to end anytime soon.

In the wake of Jefferson’s shocking merger with Philadelphia University, Dr. Stephen Klasko said there are more mergers and acquisitions to come.

After fundamentally restructuring how the organization is managed in 2014, Jefferson ended its financial partnership with Main Line Health and began pursuing new arrangements. In May, it finalized a merger with Abington Health creating a local health care behemoth controlling five hospitals: Abington Memorial Hospital, Thomas Jefferson University Hospital, Jefferson Hospital for Neurosciences, Lansdale Hospital, and Methodist Hospital.

Then in October it announced plans to merge with Aria Health giving the organization a total of 22,900 employees, 4,384 physicians and 2,236 inpatient beds. It also added three more hospitals: Aria Health Frankford, Aria Health Torresdale, and Aria Health Bucks County.

Klasko said that eight hospitals is only the beginning. “Spoiler alert, there might be more soon,” he said in an interview on Thursday.

“We have an academic pillar, a clinical pillar, an innovation pillar, and a philanthropy pillar,” he said. “My guess is we’ll do mergers in all four pillars. Most of the merger activity has been in the clinical pillar and there will be more. [The Philadelphia University deal] is one of the first ones in the academic field, and we’re looking at some really exciting mergers in the innovation pillar.”

He stopped short of disclosing any specific deals the company has in the works.

“Each of the heads of our pillars knows that if they come to me with a great partnership, I’m going to say yes,” he said.

Klasko has been famously saying for a while now that he wants to transform Jefferson “from Blockbuster to Netflix” meaning that he wants to deliver health care to the towns and counties where it’s needed most — rather than making patients travel to Center City. That certainly seemed to be the motivation behind the Aria deal, which allowed Jefferson to expand into Northeast Philly and Bucks County, and the Abington deal which got them into Montgomery County.

What does it take to get Klasko and the Jefferson brass interested in a merger deal? He’d certainly prefer a “hub-and-hub partnership” where people can utilize Jefferson’s facilities in Center City as well as another company’s facilities in, perhaps, the suburbs. (That certainly seems to be the case with Philadelphia University, where students will have soon have the choice of taking classes in Center City or on a tree-lined campus in East Falls.)

Another determiner is that the deal “has to makes sense, there has to be a synergy,” he said.

On the innovation side, that might look more like partnerships with entrepreneurs or health care tech companies rather than full-fledged mergers, he said.

Now that the Philadelphia University deal has made splashy headlines, Klasko said it’s “sending a signal that we’ll give something up to become part of something much larger.”