How We Helped a Health System Evolve Its Investment Program in Alignment With Its Enterprise-Wide Strategic Plan

Executive summary:

  • Thomas Jefferson University (TJU) developed a strategic resource allocation framework to rationalize and simplify the complex legacy portfolio structures it had inherited through mergers and acquisitions.
  • As TJU's OCIO provider, Russell Investments built a custom, multi-asset solution that simplified the organization's investment program by paring it down from 14 separate pools to four consolidated asset pools.
  • The solution reduced TJU's administrative overhead and risk and brought the organization's investment strategy into full alignment with its enterprise-wide financial plan.

Managing Director of Market Leadership, Lisa Schneider, recently joined Al Salvato, Senior Vice President of Finance and Chief Investment Officer at Thomas Jefferson University (TJU), to discuss how TJU developed an integrated resource allocation framework to balance total enterprise risks. Below, we share highlights from their conversation and additionally explain how we were able to help streamline efficiencies in TJU's investment program, resulting in significant cost savings for the organization.

About TJU

Thomas Jefferson University is a large, private academic health system composed of nationally ranked hospitals and academic programs. With more than 30,000 employees, 4,400 faculty, 8,300 students, and 1,680 medical staff, these constituent organizations work together to provide quality patient care and education to future healthcare professionals. The investment office is led by Salvato, who oversees over $4 billion of non-qualified and qualified assets and $2.2 billion of defined contribution assets.

TJU's challenge

TJU has been steadily growing larger in size since the mid-2010s, acquiring or merging with four other healthcare organizations and one university and taking on the management of additional assets. With this hefty organizational expansion, the investment program more than tripled, from $1.3 billion to over $4 billion in non-qualified and qualified assets. This meant that TJU had a mix of defined benefit plans, extended working capital pools, short-term pools, and long-term pools to manage. Each asset pool played a different role within the investment program, which required unique strategic asset allocations, investment objectives, liquidity profiles, and time horizons.

The addition of each subsidiary organization's multiple, unique asset pools resulted in a highly complex (and complicated) structure for the overall organization's CIO to navigate, as illustrated in Exhibit 1.

"As institutions came into the mix, they brought with them different debt profiles, risk profiles, and investment portfolios," Salvato explained to Schneider. "My challenge then became, how could I better structure the overall portfolio to be responsive to the risks on the balance sheet?"

Legacy investment program - Umbrella organization