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Talking about a Revolution

It's a chilly Tuesday morning in Center City Philadelphia, and inside the offices of Jefferson Health, Dr. Stephen Klasko '74 is dancing.

To the Van Morrison tunes blasting from his stereo, he dances. From his corner office out to greet a visitor, he dances. During a photo shoot, in between poses, he dances, and chats up the photographer, and cracks jokes, and, of course, asks his assistant how long he has until his next meeting.

This is a man who talks nonstop. Who moves nonstop. Who ideates nonstop.

With Klasko around, it's constant motion, and it's constant energy, and it's hardly what you might typically describe as executive-suite behavior. But this obstetrician-turned-health-care revolutionary is hardly your typical executive, and if he's made anything clear over the course of an impressive career, it is this: He's going to dance, and he's going to dance quite intentionally to the beat of his own drummer.

Because, quite frankly, he thinks his drummer is playing the right song.

Klasko arrived at Jefferson Health in 2013 with the reputation as something of a rebel in the generally staid health care industry, and in the three years since, he's done little to change that perception. After leading massive organizational change (and fueling substantial growth) at the University of South Florida Health System and serving as dean of the fledgling Drexel University College of Medicine, Klasko has at Jefferson done nothing less than completely redefine one of Philadelphia's oldest institutions.

In just the past year alone, Klasko has pushed through a series of mergers and acquisitions that will transform Jefferson from an urban academic medical center with revenues of $1.8 billion into a regional powerhouse with revenues nearing a staggering $5 billion. The mergers will see Jefferson take under its wing not only three major Delaware Valley health systems—Abington Health, Aria Health and Kennedy Health—but also, eventually, Philadelphia University, a traditionally design-focused university with no connection to the world of health care at all (that deal, he admits, was not an easy sell with his trustees).

The deals and mergers have been cataclysmic for the Philadelphia health care and higher education scenes, but talk to Klasko about his still-unfolding strategy and it becomes clear his plans for Jefferson go far beyond growth alone. What he's really striving for, he says, is revolution.

During a lengthy interview with the Bulletin late this winter, Klasko spoke not just about his plans for Jefferson (and they are bold plans, indeed) but also his more broad thoughts on both the health care and higher education industries.

To hear Klasko tell it, those industries share one thing in common: They are broken. His stated intention is to help fix both.

You have been very vocal in your belief that health care needs to change—and change substantially. Why?

It's become very obvious to me that we are going through the largest revolution in a century as it relates to health care. And yet, I look around, and everyone is still acting the same way they always have.

We talk a lot here at Jefferson about going from a Blockbuster model to a Netflix model for health care, and to me, the reason is clear. You look at Blockbuster and somewhere along the way, it lost track of the idea that the product it was selling was the entertainment—not its stores. The product was the entertainment. After all, if I'm a customer, and I can get the same product from Netflix right in my mailbox as I could at Blockbuster, why on earth would I go to the store?

I recognized fairly early on that health care was in a similar situation. I've had a few aha moments, and one of them is this: The real product of an academic medical center is not the hospital itself, or the buildings that comprise it. The product is the care and the caring it provides. Jefferson has a 100-year-plus history of being the place you go to for great care and great caring. So the question I had to answer was, 'How do I take that outstanding legacy and turn this institution into a new and more entrepreneurial kind of place?'

It seems as though a big part of your answer to that question has been about mergers with other health systems, and expanding Jefferson's geographic footprint. How have you approached this massive expansion? And how have you been able to win over these new partners and get them to join with you?

The traditional model of the academic medical center merger is what you'd probably describe as a hub-and-spoke model. But I don't know about you—I don't like being a 'spoke.'

So when we started this process, we took a direction that others hadn't before. When we were speaking with Abington Health [about a merger], for example, and I was trying to differentiate us [from our competitors], I told them, 'You know, I know the other guy is going to treat you as a spoke. But if you come with us, you'll be a hub, and we'll be a hub.' If you look at the Abington merger, we were competing with several other systems there. With the Aria deal, we were up against a bunch of completely different folks. And with Kennedy, with a completely different set of folks again. So I think the message worked.

Why do you think that was, exactly?

We recognized and made clear that we believed we needed to be bigger, but not just bigger for bigger's sake. We wanted to be a place that was large enough to really explore this very philanthropic/entrepreneurial/academic model that I see as the future, but we wanted our potential partners to know that while there may be bigger places out there than us, and while there may be places more highly ranked than us, there won't be many that have all of the things going for them that we do, with a truly shared governance and a really strong sense of partnership. And so when something with Abington happened, well, that got other people to take notice. So when Aria was looking around for a merger, we could say, 'Don't come to talk to us about us, go talk to Abington about us.'

This is a substantial organizational change for Jefferson, and there are a lot of power dynamics at play. Was this vision for growth difficult to sell?

Well, I think the real heroes in all of this are our trustees. Every one of these mergers has been negotiated under a shared governance model. We're going to go from a $1.5 billion operation to more than $4 billion by the time this is all done, and in the process, the Jefferson trustees are actually going to be a minority on the board. This is a very different model. But at the end of the day, what I knew and what I saw in my previous lives at Drexel and USF was that health care was undergoing a revolution, and I knew that if Jefferson was going to be a leader in that revolution, we needed to change the vision for the institution. What we're doing is really reimagining health care and medical education.

What were the concerns among your stakeholders that you had to address?

There are different answers for each group. From my point of view, we've got four stakeholder groups—the trustees, the management team, the faculty and staff and the community. There were legitimate concerns [we needed to address]. But I think the one word that I would use here as a key to the process is this: over-communicate. I really tried to do that.

On my first day, I sent out emails to all 14,000 of our staff saying, 'Hi, I'm your new president. What's the one thing we should change here at Jefferson? What's the first thing you would do if you were me?' And you know what? I got more than 1,000 responses. I think that sent a signal [that we were listening]. I made sure to address the staff. I held town halls. I had lunches with the faculty. We really tried to over-communicate along the way.

The trustees must have been a particularly interesting group for you to win over. As you said, with each move you made, you were not only taking Jefferson on a new and completely uncharted path, but you were also reducing their power, in a way.

I started working on that conversation, I think, even before I even got the job. Because in truth, I was a bit of a different candidate in the first place. I'm a very different kind of person than you would have traditionally looked at for a job like this. But the trustees chose me, I think, because they knew that in order to go to the next level, they had to transform this place. So I reminded them, 'Hey, you didn't bring me in here as a heavy metal band to ask me to play classical music.' I think they were committed to that idea. So even with something as big as merging the hospital and the university—this was a major change—they were positively disposed to at least giving that a shot.

I want to shift to higher education for a moment. Much has been said about the challenges facing this industry, but I'm wondering if you agree with those who say it's on the cusp of some real and fundamental change—potentially negative change.

Yes, I think that's true. Just like health care, higher ed has really missed out on the consumer revolution. Academics are holding on to a totally outdated model, where a bunch of faculty members get together and tell a bunch of millennials what they need to learn—and they do it in a way that says, 'I'm going to teach you the way I learned, because that's the way I learned.' But this is totally antithetical to the reality of students today.

I think sometimes, just like with health care, that we just need to get over ourselves. We keep trying to tinker with a failed model. It's a model that says we get to charge a ton of tuition for a course that, by the time these students take it, is probably irrelevant.

In that sense, I give kudos to Lehigh for something like Mountaintop. That's a great experiment that ought to be expanded, and I hope we see more and more Mountaintops at other universities, too.

Some believe that we are going to start seeing universities closing their doors. Do you agree?

Yes, I believe that some of the non-creative, medium-sized schools out there that try to continue to charge tuition at a very high level while doing the same thing will be in trouble. But as the Philadelphia Inquirer recently pointed out [in its coverage of the Philadelphia University merger], neither Philadelphia University nor Jefferson will be among them.

Philadelphia University thought very long and very hard about who they wanted to partner with. It wasn't a university that was in trouble—it was a university that was doing well. They can boast about a 95 percent job placement rate for their graduates. Their president, Stephen Spinelli, believes as I do that in higher ed these days you can't afford to just tinker with the existing model.

I know you said there were some challenges selling your team on the health care mergers, or at least the scope of them. I am guessing the Philadelphia University move was even more difficult.

Honestly, yes, this was the hardest one for my trustees to get. Here we are as a health sciences university, and there they are with a big focus on design. But I felt strongly that there were some really interesting synergies there—synergies between design and health. A big future of health care is going to be built around patient experience, and that is largely about design.

Here's the big question everyone in our world is asking: How does higher ed fix itself?

We have to come up with a new model, period. Look, higher education is very expensive. And this is where academia and health care are like so very few other industries, because academia and health care are among the few industries in which the market doesn't determine what you pay for something.

I've got a story that can help illustrate this. My son is an actor in New York. Recently we heard from him that he had come down with a bad case of food poisoning, and it was bad enough that he had a two-hour stay in the hospital. Now, that two-hour stay generated a hospital bill of $8,000. It was like, he got there, they gave him an IV, and he felt better—and he told them that, by the way—but then they made him get another. That's like going to Applebee's, having a sundae, telling them it was good, and then them saying, 'OK, here, have another, and we'll charge you for that one, too.' It's the same in academia, where the model is largely about a group of individuals standing up and giving lectures about what they deem you need to know, and then their universities charging whatever it is they want to charge you.

In your new book, We CAN Fix Healthcare: The Future is NOW, you suggest that Republicans and Democrats could in fact collaborate on a new future for health care. Given the current political climate, doesn't that seem a bit like science fiction?

Well, we wrote it as science fiction, because science fiction allows us to shift perspective. Imagine you're in the future looking back. What key things did you do in 2016 that led to the ideal health care future of 2026? Science fiction allows you to play out new answers. But when we look at the things disrupting the old health care today, they're not science fiction. We could move ahead right now. And based on my list of the 12 disruptors leading to the demise of the old health care, the two parties could easily agree to get on board. In fact, we propose platforms for each party that simply use different avenues to get to the same changes. We must enable the consumer revolution in health care delivery. We must reimagine the system as a whole to create access and value. And we must demand that physicians of the future are humans, not robots, because robots will do the memorization and data analysis of the future. Physicians need to do what only humans can do—observe, not just see, and communicate, not just tell.

You've set a lot of things in motion at Jefferson. But I'm wondering: In 10 or 20 years from now, where would you like the institution to be?

The answer I'd give you is this: If you were to come down here to Philadelphia from Mars 20 years from now and ask somebody, 'Hey, where's Jefferson?' my hope would be that they would look at you with a real look of incredulity on their face. Because I want the answer to that question to be: 'Jefferson is everywhere. Jefferson is on my television. It's at one of the many urgent-care centers around the region. It's over in Northwest Philadelphia, on the campus of Philadelphia University. It's the place that really sick people go to get better.' I want Jefferson to be more than just a building or buildings. I want us to be a completely reimagined and transformed health care enterprise. When you think of the Mayo Clinic, you have an image that pops up in your mind. When you think of Johns Hopkins, you have an image that pops up in your mind. One day, I want Jefferson to be an image in your mind in the same way—that's what I want for this place.

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Stephen Klasko

Klasko arrived at Jefferson Health in 2013 with the reputation as something of a rebel in the generally staid health care industry, and in the three years since, he's done little to change that perception. Photo: Chris Crisman