Dr. Stephen Klasko, MD, MBA is a transformative leader and advocate for a revolution in our systems of health care and higher education. He has been a university president, a dean, a CEO, and an obstetrician, and now pursues his vision for the creative reconstruction of American healthcare by bridging traditional academic centers with entrepreneurs and innovators. He currently serves as an Executive-in-Residence at General Catalyst, North American ambassador for Sheba Medical Center in Israel, as CMO of Abundant Partners, and on the board of directors at Teleflex. In 2022, President Biden appointed him to the National Board of Education Sciences. Dr. Klasko served as president of Thomas Jefferson University and CEO of Jefferson Health from 2013-2021, where he led one of the nation’s fastest growing academic health institutions based on his vision of re-imagining health care and higher education.

The Pulse: Could you please give an overview of your background and the journey that led you to Jefferson Health?

Dr. Stephen Klasko: I started my career as the midnight to 5am DJ at WYSP in Philadelphia. 50 years later, I have a book coming out called Feelin’ Alright: How the Message in the Music can Make Healthcare Healthier. So, I like to say that everything I learned about being a healthcare leader, I learned from being a DJ. 

I went to medical school and then I did my OGBYN residency in Allenstown, PA, but in the 1980s I realized that we were teaching kids things in medical school that didn’t make sense, so I took a pay cut and went into academics. I got my MBA at Wharton in the 90s and wrote my first book in 1999 with a Wharton professor, Greg Shea, called the Phantom of the Stethoscope. I went on to become the Dean of Drexel and eventually the Dean and CEO of University of South Florida Health. 

When I first got the call for Jefferson, I thought it might be a prank call because Jefferson was a very conservative place and I’m the opposite of that. But they really wanted to transform, and I became the first leader of both the University and the Health System at Jefferson in about 30 years. In nine years, we moved from a two-hospital, one-campus university to an 18-hospital, two-campus university, with a Medicaid and Medicare Advantage insurance firm. We merged a top-10 design university with a 197-year-old academic medical center because we wanted the academic medical center to think like a startup company.

The Pulse: What were the key experiences that prepared you to be a transformative health system CEO?

SK: When I was at USF, there were three really interesting things that defined my career.

First, I’m a pilot, and it hit me that every two years I had to get my technical competence assessed as a pilot, but nobody continues to assess my surgical competence. So, we created the largest assessment of technical and teamwork competence in the country.

Second, I realized that we select doctors for medical school based on science, GPA, MCAT and organic chemistry grades, and yet we are amazed that doctors aren’t more empathetic, communicative, and creative. That made sense back in the 70s when I went to medical school, because I had to memorize a lot of stuff. Now everything’s on my iPhone, but we still select every medical student to be a physician scientist at Yale. So, we started to focus on building empathetic leaders.

Third, we started something called the Villages Health, a primary care group in which 200,000 senior patients own the health system. That drove home the importance of being patient centric.

The Pulse: Could you discuss transforming Jefferson from a traditional health system to one that provides “healthcare at any address”?

SK: In almost every other sector, you define a company not by its real estate address, but by the service that they provide. But in traditional healthcare in America, we’re defined by the place where we failed to keep people healthy.

The goal was for Jefferson to be defined and differentiated by our care and our care delivery, not by the place where very sick people go. So, people should associate a great doctor or a great telehealth experience with Jefferson. We focused on differentiating our patients’ experience. That’s how we got from focusing on “sick care” to “Health Assurance.”

We also began working with technology partners that allowed us to provide a great digital consumer experience, while continuing to deliver world-class care. As a part of that effort, I met with Hemant Taneja at General Catalyst, and we co-wrote the book UnHealthcare: A Manifesto for Health Assurance. Jefferson formed a strategic partnership with General Catalyst that was announced in 2021.

The Pulse: What is Health Assurance and how does it solve some of the key issues facing the healthcare system?

SK: The goal of Health Assurance is to create a more proactive, affordable, and equitable system of care. Our current system of “sick care” is designed primarily to help people only after they’ve developed health issues. In contrast, Health Assurance companies aim to ensure that we stay healthy by providing personalized and preemptive care, supported by technology.

Health Assurance is based on quality, cost, patient experience, and outcomes. Care should start at home. Providers should coexist with deep learning and AI. Population health, predictive analytics, and social determinants need to move to the mainstream of clinical care and payment models. And, perhaps most importantly, patients should be able to access their healthcare in the same flexible way they access every other consumer good. 

The Pulse: When it comes to building a system of Health Assurance, what is the role of technology companies versus traditional healthcare providers and how can the two best collaborate?

SK: Technology is nothing without trust. So, we need to leverage the trust that people have in their doctor and their health system, along with technology. Look at why Google Health has failed. People don’t trust them with all of their genomic data or all their health data.

At General Catalyst, we call it responsible innovation. We think VCs need to work with the health systems to put ethics first from the start. For example, if we knew during the Industrial Revolution that the internal combustion engine was going to cause climate change, we might have made some tweaks. Or if we knew that Facebook wasn’t just for seeing my incredibly cute grandkids in Providence when I’m in Philadelphia, but that it could affect elections and spew hate, we probably would have put in some guardrails. So, we firmly believe that technology isn’t enough, but that you have to mix technology and trust and put ethics in at the beginning.

We need radical collaboration between technologists and traditional care ecosystems. At Jefferson, we formed strategic partnerships with General Catalyst and other VCs to improve Jefferson with technology. We brought together people from Silicon Valley and Jefferson, and that helped the founders understand the perspective of the health system as well. At General Catalyst, we just announced a radical collaboration with 15 health systems representing 20-25% of the beds in the country, which gives them full access to our culture of innovation.

The Pulse: What inhibits traditional healthcare providers from delivering a consumer-centric experience?

SK: I put the blame on you, the patients, because you’ve allowed us to get away with stuff that you wouldn’t allow in any other consumer industry. People have tolerated a lousy experience for way too long.

So, it’s because we’re lazy and patients allow us to get away with it. Most Chiefs of Marketing look like me: white folks in their sixties that came up through the healthcare system and know all they have to do is make a 30-second commercial.

A Harris poll just came out saying that 81% of people agree that shopping for health care services should be as easy as shopping for other types of services. Two thirds of people said it feels like every step of the healthcare process is a chore. And, this one really depressed me, 62% said the healthcare system feels like it’s intentionally set up to be confusing. So, our marketing dollars should be going to solving those problems.

The Pulse: How can health systems personalize healthcare for the individual and move away from a one-size-fits-all approach?

SK: We should be punished for failing to segment customers. It always makes my brain explode when I see a health system billboard that says: “We’re Patient-Centered.” Are you patient-centered for a 68-year-old with an Oura Ring and Apple Watch, like me? Or for a 30-year-old disconnected person? Or a 75-year-old who only uses Facebook to see their grandkids?

In 2020, I was a Distinguished Fellow of the World Economic Forum and at the last WEF in Davos before COVID, I was having a drink with one of the heads of a global banking committee. He said, “40 years ago, the two sectors that escaped the consumer revolution were banking and health care.” Then he took a sip of his drink and said, “now, you’re alone.”

Banks used to only be open from 10 to 4 and you had to go in to deposit a check, until entrepreneurs came in and started providing a better experience. We’re in the same cycle now with healthcare, where new companies are coming in and providing consumer-centered care for folks that have a choice. I think that will become the norm, just like in banking, and if you’re not doing that as a health system, you should go out of business.  

The Pulse: Could you give an overview of your new role at General Catalyst?

SK: I decided I wanted to spend this next phase of my career figuring out how to take population health, social determinants, and health equity from philosophic and academic exercises to mainstream clinical care payment models. So along with Ken Frazier, the former CEO and current executive chairman of Merck, I joined General Catalyst’s Health Assurance team as an Executive in Residence.

The Health Assurance team at General Catalyst is a group of investors, technology innovators, and healthcare leaders building companies that help people stay well, bend the cost curve through innovation, and make quality care more affordable and accessible to all. .

The Pulse: What companies or areas are you most excited about as part of you and your firm’s efforts within Health Assurance?

SK: The companies that I’m really excited about are the ones that are using technology and humans to address issues no one else would touch. We invested in a company called Equip Health that’s addressing eating disorders. 82,000 people die each year from eating disorders. The other company I’m an advisor to is Genial, which addresses Autism. Cityblock is another company General Catalyst is invested in that utilizes community-based workers to treat the Medicaid population. Eleanor is a company trying to solve the substance use disorder problem. These are companies that are all doing well while doing good.

On the other side of things, I’m excited by companies improving processes that are stuck in the 90s. For example, I’m advising a company that’s democratizing clinical trials and making sure everyone has access to them.

Another of my post Jefferson roles is as the North American Ambassador for global innovation for Sheba Medical Center, the largest health system in Israel and an innovation powerhouse. AI Doc is a company born at Sheba with a great founder, Elad Wallach, in which GC invested and has become a shining example of how AI can be an adjunct to radiologists, in essence the best of humans and technology.  As an advisor, I get to help them create an even more powerful platform across many specialties, bringing all my work at Sheba and GC together in a cauldron of radical collaboration.

The Pulse: What advice would you give to someone building a Health Assurance company?

SK: There’s so many things wrong with healthcare, so don’t just create a point solution. Try to partner with people in whatever area you’re targeting to create a horizontal experience for patients. Bring the point solutions together and create something that actually gets at the problem. Founders should go after the 80% of stuff that impacts people’s health that we spend only 20% of our time on in healthcare.

Interviewed by Tommy McGrath, December 2022.

—

On Feb 16-17, 2023, Wharton is excited to feature more expert perspectives at our annual Wharton Health Care Business Conference. This year’s theme is ‘The Empowered Health Care Consumer’. Conference details and early-bird tickets are available here.