Jefferson, Philadelphia University to merge

In a deal that would join two fast-evolving institutions, Thomas Jefferson University and Philadelphia University on Thursday announced a preliminary agreement to merge.

The deal, expected to close by the end of June, could boost Philadelphia University's profile in the competitive Northeastern U.S. market for undergraduates, giving some a straighter shot at Jefferson's medical school.

Jefferson, which has announced plans to merge with two hospital systems since 2014, would see its enrollment nearly double and its academic programs expand.

The leaders of both institutions emphasized that the deal would help the institutions offer more programs focused on real-world problems, rather than traditional academic disciplines.

"Most schools say, 'Let's have this little program and try to make it special.' We're saying we have this university, and it will all be special," said Philadelphia University president Stephen Spinelli Jr., who has led the school since 2007. He will join the Thomas Jefferson board and chair a new academic oversight board at Jefferson.

During a three-year transition, the Philadelphia University name will not change, but eventually it will be made clear that it is part of Jefferson, said its chief executive, Stephen K. Klasko, who will continue to lead the entire organization.

"We're doing this because in three years, we'd like to hear people say this is the new model of a university," he said.

Klasko agreed that the merger is not the first thing one would expect from either partner. He said it was like a song that seems strange at first. "When you actually hear the song a few times, you realize it's a brilliant song," he said.

Nicole Hall, who chairs Philadelphia University's alumni board, called the merger "a really interesting partnership."

She and the 16 other board members learned of the merger from Spinelli during a call Thursday morning. She said the news surprised her.

"Naturally, there were some general questions and a lot of transition things that are to be expected," said Hall, who earned a master's degree in sustainable design from Philadelphia University in 2009. "It was a very positive response."

"We were assured that things at this point are going to remain similar as far as the campus culture is concerned," she said.

Under Spinelli, a cofounder of Jiffy Lube, the school launched its College of Design, Engineering and Commerce, which was attractive to Klasko because it emphasizes collaboration and hands-on learning.

The deal comes as many small colleges and universities are under financial pressure as the number of 18-year-olds drops and rising student debt is pressuring institutions to keep tuition increases in check. In the Philadelphia region, at least half a dozen small institutions had operating losses in their most recent fiscal years.

Mergers by tax-exempt schools are rare, averaging two or three over the last decade, but the pace will double in the next few years, Moody's Investors Service predicted.

Philadelphia University has been more profitable under Spinelli, who has stressed innovation and entrepreneurship.

He and Klasko met about six months ago when Klasko paid a quick visit to the East Falls campus, unsure what to expect.

After talking, they walked outside and ran into a Jefferson professor and emergency medicine physician, Bon Ku, who was on campus meeting with an industrial designer about some projects he wanted to do in medicine.

"I thought he set me up," Spinelli said. "But then I learned that he doesn't do that."

That chance meeting set the two racing toward the deal that was approved by the Philadelphia University board Monday and by the Jefferson board Thursday.

"This is a big opportunity," Spinelli said. "I could not have crafted a more interesting next step personally, or for me professionally."

The merger with Philadelphia University is the third for Jefferson since Klasko became chief executive of the Center City institution in September 2013.

Soon after splitting from Main Line Health, its longtime partner, the new Jefferson under Klasko announced a merger with Abington Health in Montgomery County. It became final in May.

In October, Jefferson announced that it had a preliminary deal to add Aria Health, which has three hospitals, in Frankford, Torresdale, and Langhorne. A definitive deal has not yet been reached.

Philadelphia University, formerly known as Philadelphia College of Textiles and Sciences, was founded in 1884 by textile manufacturers to improve the quality of U.S. products. It changed its name in 1999.

It has also added graduate programs, which are less reliant on tuition discounts to attract students. Since the 2011-12 academic year, the number of full-time graduate students has risen 52 percent, to 538. The number of part-time graduate students is up 44 percent.

The school has 2,249 full-time undergraduates this academic year, down from 2,635 in 2011-12.The school is in the midst of finals week, but Susan Christoffersen, an economics professor, said the merger was the talk of the campus. "We're all pretty excited," she said. "We can gain from the partnership. They are very different. We do things creatively over here. Change is scary, and change is good."

She added: "Every health professional should know economics."

hbrubaker@phillynews.com 215-854-4651 @InqBrubaker

Philadelphia University

Enrollment: 2,787 students.

2,249 full-time undergraduates this academic

year, down from 2,635 in 2011-12.

538 full-time graduate students, a 52 percent rise since the 2011-12 academic year. Part-time graduate students are up 44 percent.

Endowment: $28 million.

Jefferson University

Enrollment: 2,971 students.

1,072 at the Sidney Kimmel Medical College.

281 at its School of Pharmacy.

1,618 full time in Jefferson's schools of nursing,        health professions, and population health, and

Graduate School of Biomedical Sciences.

Endowment: $708 million.

SOURCES: Audited financial statements, the schools

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