Sutter Health's CEO will retire in early 2022, closing out a tenure marked by a long-running, high-profile legal battle against the health system's home state.
Sarah Krevans came to the helm of the Sacramento, California-based health system in January 2016. Not-for-profit Sutter said its board will conduct a national search for her successor and will consider both internal and external candidates.
Prior to becoming Sutter's first female CEO, Krevans served as the system's chief operating officer, regional executive officer and president of its Sacramento Sierra region.
"Sutter's integral role in the communities we serve has been on full display during the pandemic," Krevans said in a statement. "I see firsthand how incredible our people are—especially our staff and clinicians on the frontlines treating patients—and the significant benefits of an integrated network that can share best practices, resources and support."
Krevans, who was not available for comment beyond the release, became CEO just after Sutter had undergone a major reorganization, shrinking from five regional divisions to two. She succeeded Patrick Fry, who had served in Sutter's top job for 11 years.
Sutter Health Board Chair Gubby Barlow said in a statement that the board is grateful for Krevans' commitment to Sutter's mission and vision during her 22 years with the organization.
"As CEO for the past five years, Sarah has been a leading voice in advocating for the patients and communities that Sutter Health serves," the statement said.
Sutter's announcement comes less than a month after a California judge approved a final settlement in the sweeping antitrust case the health system had battled since 2014. The case gained prominence in 2018 when California's then-Attorney General Xavier Becerra joined.
In addition to paying a $575 million settlement, Sutter now must adhere to strict rules governing its business practices, such as limits on out-of-network charges and a prohibition on all-or-nothing contracting. The lawsuit had accused Sutter of anticompetitive practices that led to higher healthcare costs for Northern Californians compared to people in other parts of the state.
Sutter's news release did not mention that case, but it said the system has held its annual rate increases to health plans to less than 3% during Krevans' time as CEO.
The release also said Sutter has worked to lower the total cost of care to patients and insurers. However, an April report from the Health Care Cost Institute found stark variation within the system's prices for the same procedures. In some cases varying by as much as eight times.
Krevans was the second-highest-paid female CEO among not-for-profit health systems in 2018, having made $4.5 million in total compensation that year.
In 2019, Krevans' total compensation reached $5.5 million, with the largest portion of that total—almost $2.2 million—coming from bonus and incentive pay. That came during a year in which Sutter posted a sizable operating loss—$548 million on $13.3 billion in revenue—partly due to the large antitrust settlement being recorded that year.
Sutter took a bigger financial hit than many of its peers during the COVID-19 pandemic. The system lost $321 million on $13.2 billion in operating revenue in 2020, a 2.4% loss margin. Krevans said in a statement at the time the system invested heavily in its pandemic response, but that it was one of the toughest financial years in Sutter's 100-year history.
The press release said Krevans has created a "culture of safety" at Sutter and has secured important philanthropic donations.
In recent months, Sutter employees at several of its facilities have accused the health system of short staffing that's led to long wait times, safety issues and burnout.
Most recently, employees at a Sutter hospital in Antioch, California said last week they plan to strike in October over what they allege is chronic understaffing, challenging work conditions and unfair labor practices. That's after multiple protests over the summer.
Sutter said in a statement it's disappointed the Antioch hospital employees rejected the contract, but continues to engage in good-faith negotiations and hopes the union is equally committed to avoiding a costly strike.
In August, Sutter paid $90 million to settle a Medicare Advantage fraud case brought by the U.S. Justice Department, which said the health system got inflated payments because it claimed its members were sicker than they actually were.
CORRECTION: This story has been corrected to clarify findings from an April Health Care Cost Institute.