- Sarah Krevans, president and CEO of Northern California healthcare giant Sutter Health, has announced plans to retire in early 2022.
- Krevans, the first woman to lead Sutter, is departing the integrated nonprofit after five years as chief executive, during which she shepherded the system through the pandemic and focused on expanding access to mental and digital healthcare, Sutter said in a Wednesday release — but also faced several high-profile controversies, including worker disputes and numerous multi-million-dollar settlements with the federal government over alleged fraud and anti-kickback law violations.
- Sutter Health's board said it will conduct a national search for Krevans' replacement, considering both internal and external candidates. The system declined to answer requests for more detail on the CEO search.
Krevans was appointed president and CEO of Sutter Health in January 2016, following the retirement of longtime CEO Patrick Fry. Prior to that, the executive served as Sutter's chief operating officer and regional executive officer and president of the Sutter Health Sacramento Sierra Region.
Overall, Krevans has been at Sutter for 22 years, and helmed the system during a period of unique volatility.
During her tenure as leader of Sacramento-based Sutter, a regional powerhouse serving roughly 3 million Californians annually, Krevans focused on bettering affordability, improving health equity and implementing new digital health and mental health tools, Sutter said.
However, whoever replaces Krevans will inherit a dicey financial situation, shaky relations with worker groups and a brand marred by several recent legal disputes with the federal government.
Sutter has operated at a loss for the past two years that was exacerbated by COVID-19, leading Krevans to launch a sweeping review of Sutter's finances in March, noting "it will take several years to fully recover" from the financial effects of the pandemic.
Last year, the system posted a $321 million operating loss as patient volumes plummeted amid the pandemic, resulting in a series of downgrades from ratings agencies though investment income helped boost Sutter into the black.
Despite the ongoing restructuring and cost control initiatives, Sutter posted another operating loss of $49 million in the first quarter of this year.
The second quarter, though, yielded a glimmer of hope with $106 million in income from operations, "Sutter Health's balance sheet remains vulnerable," the nonprofit said, with ongoing stressors including the need to repay advance Medicare loans and pricey labor costs.
Sutter doesn't expect to break even by year's end, despite ongoing actions to close the financial gap — including plans to lay off 400 employees this year, in addition to roughly 280 information technology jobs that were cut in April.
Along with the financial vulnerability, the system has also sparred with the government and unions during Krevans' time as chief executive. Sutter has agreed to a series of pricey settlements in the past few years over alleged reimbursement fraud and anti-kickback violations.
Most recently, in late August, Sutter announced it would pay $90 million to settle whistleblower allegations of risk adjustment fraud — the largest False Claims Act settlement against a hospital system for alleged fraud in the Medicare Advantage program.
Earlier that same month, a federal judge approved a $575 million antitrust settlement against the hospital system to settle allegations that its anticompetitive practices led to higher healthcare costs for consumers, two years after Sutter agreed to the sum.
That settlement agreement, reached in 2019 to resolve allegations brought by the United Food and Commercial Workers and Employers Benefit Trust and other plaintiffs, came after a California superior court judge ruled that Sutter Health intentionally destroyed 192 boxes of documents involved in the lawsuit in 2017.
Krevans' replacement will also likely face tenuous contract negotiations with nursing unions, as National Nurses United is still in talks for contracts at Sutter covering more than 8,000 nurses and other staff at 16 hospitals across Northern California.