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Sutter Health’s CEO is leaving. Sacramento hospital chain has had two years of turmoil

·3 min read

Sutter Health’s chief executive announced her retirement Wednesday, capping a tenure in which the Sacramento-based hospital chain solidified its leadership role in Northern California health care while wrestling with significant financial and legal problems.

Sarah Krevans, who’s run Sutter for five years and spent 22 years with the nonprofit health care giant, said she will retire in early 2022. The chain’s board said it will conduct a national search for her replacement.

“Sutter’s integral role in the communities we serve has been on full display during the pandemic,” Krevans, 63, said in a prepared statement. “I see firsthand how incredible our people are — especially our staff and clinicians on the front lines treating patients — and the significant benefits of an integrated network that can share best practices, resources and support.”

The past two years have been marked by considerable turmoil at Sutter. The hospital chain, which serves about 3 million patients, agreed to pay $575 million in damages in an antitrust case over allegations by California’s attorney general that Sutter used its market power to force employers and insurers into lopsided contracts that ballooned the cost of care in Northern California.

Although Sutter denied doing anything wrong, it agreed to halt certain business practices for 10 years, such as “all-or-nothing” contracts that allegedly required employers and insurers to cover services at hospitals and clinics they didn’t necessarily want. Meanwhile, a separate lawsuit filed by Bay Area patients, raising similar allegations, is scheduled to go to trial soon in federal court in San Francisco.

Sutter has said the antitrust settlement won’t lead to wholesale changes in its business operations. In the announcement on Krevans’ retirement, Sutter said it has become a leader in keeping medical costs affordable. “During Krevans’ tenure as CEO, Sutter kept its rate increases to health plans to less than 3% annually, which is lower than the cost of inflation,” Sutter said.

Sutter has gone on a cost-cutting binge in the past year, a response to rising numbers of unprofitable Medicare and Medi-Cal patients and the effects of the COVID-19 pandemic. The pandemic depressed patient revenue as operating expenses jumped. In the past year and a half, through a combination of layoffs and buyouts, Sutter has cut more than 1,400 positions — leaving more than 50,000 workers still employed.

Sutter posted $321 million in operating losses last year despite receiving $800 million from the federal government in COVID-19 relief funding. However, it recorded a $106 million operating profit in the second quarter of this year.

The organization said it “has launched a financial recovery effort to address the fiscal challenges exacerbated by the COVID-19 pandemic,” Sutter said Wednesday. “This ongoing work has already resulted in the implementation of several actions and programs to make the organization more agile and resilient going forward and accelerate Sutter’s affordability efforts.”

That includes a dramatic increase in tele-medicine programs, in which patients see their doctors by video.

Separately, Sutter pioneered “unconscious bias” training to ensure that employees are treating all patients fairly, and last year launched an Institute for Advancing Health Equity, a kind of in-house think tank dedicated to exploring ideas for improving equity in health care delivery.

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