McKinsey on Healthcare
Role of academic-based health systems: An interview with Catherine Jacobson and Thomas Zenty
18 Oct 2019
Chapter 1: What is the role of academic medical centers in healthcare?
McKinsey on Healthcare, a podcast series about visionaries, leaders, and problem solvers shaping the future of healthcare. On today's episode, recorded live in Chicago, McKinsey partner Pooja Kumar is joined by Tom Zenti of University Hospitals and Kathy Jacobson of Freighter Health.
So first of all, Kathy and Tom, thank you so much for joining us. We were actually supposed to record this as a podcast, but we're just going to do it live instead. And today, we're really hoping to focus this on the role of academic medical centers and academic-based health systems in our broader healthcare ecosystem.
Chapter 2: How did the guests enter the academic medical field?
This is a topic that I'm personally passionate about, and I know that these two leaders are as well. So I'd love to just start this off by asking each of you, tell us what brought you into the academic space. Was it something you always wanted to do?
Sure. I never intended to go into health care. So kind of fell into it. My background is actually that I am a CPA, got my accounting degree and went up to Chicago with one of the big accounting firms. And when you get up there, they give you this list of industries that you want to work in. And I checked off hospitals and there was a background for that. My mom was a hospital RN.
Her entire career and my first job actually coming in high school was washing dishes in that hospital. So I know hospitals, they actually freak out a lot of people and especially accountants. And so people didn't want to be on hospitals. So I ended up being one.
But I started on the health plan side and was there for about eight years and then went over to the main medical center working in the C-suite.
Chapter 3: What challenges do academic medical centers face today?
Originally, I became the CFO, chief strategy officer, and it went from there. So really had no intention of going into academic medicine. And actually, when you start on the health plan side, you don't look at it through a very good lens because it's expensive. And that's exactly what you don't want to have when you're on the health plan side.
And I really got the completely different view once I got on the inside over at the academic medical center and was actually able to see the specialization, the differentiated services.
Yeah, I had a slightly different path. I'm a little bit atypical in that I knew what I wanted to do from the time I was 15 years old. I wanted to be a hospital administrator, which is a really geeky sort of thing to do at the end of the day, right?
But I never wanted to get into academic medicine, and the reason for that is I grew up in a really small town, and the local hospital administrator took an active interest in me, and she was a fascinating leader and Very powerful woman and someone who I'll never forget.
Chapter 4: How is culture impacting the operations of academic medical centers?
Had a big impact on my career. I had to do an undergraduate internship, and I worked in a small 200-bed non-teaching hospital. But then coming out of graduate school, we had to do an internship, and I interviewed at 10 or 11 places. I read the theses of the previous students where they did their administrative residencies and those that did them in non-academic medical centers.
And what I found is people who went to the academic medical centers had a very narrow slice of something that they were responsible for. And I didn't want to get lost in the complexity of a very large, complicated organization where I wouldn't have an opportunity for a breadth of experience.
So I chose to go into the non-academic world to begin with, thinking that I could always work my way up, which is ultimately what happened.
Very different path. What would you say is the hardest part of your job right now?
You know, what everybody talked about today, and it's going to resolve around one issue if we can ever figure it out, and that's culture.
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Chapter 5: What tactical changes are being implemented to shift healthcare culture?
And I must tell you, everything that I heard today was consumerism, consumerism, consumerism, consumerism. Academic medical centers are not designed to be consumer-centric. So what I find to be the most challenging is changing a culture that has been ingrained and taught for over 100 years. Now, people are very responsive, and we've made terrific progress.
But there's always some challenge in an academic medical center because you try to balance the tripartite mission of research, teaching, and clinical care. So to your question specifically, we put something in place about six or seven years ago. It's an acronym called CARTS.
We began to break up some of our faculty's activities along clinical administrative research, teaching, and service responsibilities. Well, when you begin to parse that out, it's not quite so easy because if someone's busy seeing patients, they don't have time to do their research or their teaching.
But at the same time, if you look at their clinical productivity and it's 9%, you know that there's something not quite right in that formula. So by breaking it out, it made an enormous positive impact. There are over 5.5 million people in the United States that work in hospitals, and I can assure you that there isn't one who wakes up every morning looking to make a patient's life more difficult.
It's a very dedicated, committed group of people. And the responsibility really resides with us to create the culture, provide the resources, do the things that we need to do to make hospitals a more effective, more efficient, high-quality, better outcomes environment, which is really what I think we're tasked with the responsibility of accomplishing, and not just today, but in the years to come.
Maybe just to follow on that thread, Kathy, I'd love to understand what are tactical things that you've done when you've tried to start to shift some of that culture or at least even shift priorities?
Yeah, and I think Tom summed it up really well on the environment in which we work around culture and exactly the way I do it is around priorities. So we have the same priorities as the faculty do in terms of seeing patients, research is important, educating students, service.
So all the priorities are shared, but the priorities are not necessarily the same in the same order on the same day because we have to take care of patients.
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Chapter 6: How are academic medical centers addressing social determinants of health?
So we have to do research, we have to do teaching, but I need to make sure my patient doesn't wait 270 days. to get into memory care. So I think what we've really worked on is as to the tactical as to how you move the change management is explain the why and really explain the why over and over again about how the world is changing. And that people are not going to wait 60 days for you anymore.
And that, yes, they actually do want to schedule their appointments online. And yes, that will require that you use a standardized scheduling template to do that. So how do you explain to somebody who is very interested in research in their program that you need to be able to have patients to provide that research on? And I mean, in terms of
me explaining it to our administrators who are working with our faculty, talking to the chairs, talking to our service line leaders, and you get some champions. You get physician champions behind you to help lead that charge, and that's how you start to make the change.
We reward for meeting those metrics. I get a lot of patient letters, a lot of patient emails, and a lot of patient visits. The biggest complaint I hear about was the bill. I get very few complaints about the clinical care. Virtually everything is in what we do that's customer facing.
Chapter 7: What future trends are expected for academic medical centers?
They love the care, they love the outcome. 99% of the complaints I get are around billing. Why is that? Well, for 100 some years, we've been focused toward not billing individuals, but by billing insurers. And the problem is if you get a bill, it's totally unintelligible. And the first thing it says on the top of the bill is, this is not a bill.
So you ask the question, well, then why am I receiving it? Well, rather than talk about the Medicare requirements, why we have to do that, we send a follow-up. And then that says, this is not a bill. So the point is, you need a Rosetta Stone to figure out a patient bill. But we have to move in that territory of consumer facing in ways we've never done before.
Now we're getting a fair amount of consternation about, is this an issue of margin over mission? So that culture is what we really have to manage. We need to be more psychologists than business people because this is about leadership. It's about buy-in.
Chapter 8: How can academic medical centers balance research and clinical care?
It's about ownership. It's about participation. And it's about changing the culture
How do you as leaders think about investments that you're making or how you spend your time when you think about the academic, clinical and research missions? And how do you see that changing, let's say 10 years from today?
It's really like any other business. You have to make enough investments that have return, but you have to understand that you have to have investments that are infrastructure also as well. So for example, I believe, and it's becoming more and more prevalent that academic medical centers are kind of owning the cancer space. And a lot of that is because it is so dependent on research.
And that's what we do. And we do that better than anybody else. And so, of course, whenever we go to focus our research investments, it tends to lean towards cancer. But at the same time, they can't do their research and clinical trials and some of the things they're doing unless you're investing in very robust basic science.
And there might not be a dollar for dollar return on that investment that we're putting into basic science. There never is. But you have to have enough infrastructure to be able to support the things you're doing in clinical research around cancer, cardiovascular, neurosciences, transplant, and so on.
And so you just have to balance that and make sure that enough of your investment is going to be ROI because it does all come back to clinical revenue. which funds all your investments in research and education? How much research can you really do that's productive if you're focusing on clinical care? And how do you balance that with faculty who went into academic medicine for a reason?
They went into that because they like the teaching environment, because they like the research and the discovery. How much of that can you actually balance? And so that's the other conversation that we're having. One of our departments has every single faculty member is 20% productive time or protected time for their research.
So kind of challenging is every single faculty member or on a balance in terms of your department, I think is the other way we're looking at balancing mission.
Yeah, the only thing I would add to that is sometimes in adversity, meaning when there's a competition for funds, creativity becomes paramount. I think one of the things that we don't do enough of in our industry is effective philanthropic support. I've been in the organization where I work now for 17 years.
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