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The Optimist

Every day, Kevin Mahoney, CEO of University of Pennsylvania Health System, is rethinking the future of health care and partnering with anyone who buys into his vision. All this despite that 1.98 college GPA.

The Optimist

Every day, Kevin Mahoney, CEO of University of Pennsylvania Health System, is rethinking the future of health care and partnering with anyone who buys into his vision. All this despite that 1.98 college GPA.

When, in February of 2020, Trinity Health Mid-Atlantic announced it was closing West Philly’s Mercy Hospital, Councilmember Jamie Gauthier panicked. She hadn’t even been a councilperson for two months, and here was a disaster in her district: The 157-bed hospital with a busy E.R. and crucial mental health service—not to mention an employer of some 800 people—was, it seemed, going to to go the way of Hahnemann University Hospital, leaving part of her district without easy access to care.

“And that was my worst fear,” she says. “I thought, The hospital will leave, and there will be condos here instead.”

She didn’t worry very long, though, because shortly after the news broke, Gauthier talked to Kevin Mahoney, the CEO of University of Pennsylvania Health System, who had himself only been in his post for a handful of months at that point. (Since July of 2019.) “He said from the very beginning, Don’t worry about this,” Gauthier recalls. “He said, This will turn out to be something great.”


A little more than a year and a global pandemic later, the Mercy moment has, almost miraculously, resulted in something great.

Working with Gauthier, Penn Medicine and the nonprofit Public Health Management Corp (PHMC) paired up and partnered with Independence Blue Cross Foundation and CHOP to debut in March what Mahoney has called the “the anti-Hahnemann” answer: the PHMC Public Health Campus on Cedar.

Penn Medicine is running the emergency department, 100 in-patient beds and hospital-based behavioral health services on the campus that’s owned and run by PHMC, which is also expanding offerings to offer primary care and community-based services around housing and nutrition and digital literacy.

Meantime, most of those 800 jobs were saved. Some Mercy employees transferred to other Trinity Health locations; some 500 stayed on campus, employed by Penn Medicine, which offered jobs to everyone with a post that translated to the new facility.

This could have easily gone another way, and might have if we were dealing with the many (many!) Philly players who possess neither the fresh eyes nor the can-do attitude of a new Council rep and newly minted CEO. Penn Medicine could have simply absorbed the Mercy patients and carried on. “But,” Mahoney says, “that would be absolutely the wrong thing to do.” For one thing, it was a matter of access, which is also a matter of equity. “Why should someone on 52nd Street have to go two miles and 20 blocks to get their healthcare?” Mahoney says. “You know that wouldn’t happen in Bryn Mawr.”

On top of that, he adds, there were all those jobs. “And economic security is probably the number-one social determinant of health.”

The whole point of Penn Medicine is about what comes next—or rather, what could come next or what should come next—and then bringing that vision to life.

If you know even a little bit about Penn Medicine, then you know that the Mercy collaboration isn’t the biggest or most impressive project a reporter could highlight. Not by a long shot. You probably know, for instance, that Penn Medicine was one of our saviors during Covid, caring for more than 24,800 Covid patients, pivoting some 100 labs to Covid research, and giving out upwards of 215,000 shots of vaccine (a vaccine based on Penn research, by the way).

You might also know they’re set to open their new $1.5 billion Pavilion— a facility that civic heavy-hitter and Penn Medicine board member Richard Vague calls “the hospital of the future.” You know, too, that the $7.8 billion enterprise that is Penn Medicine is the city’s largest employer, with 42,000 employees; and you know that they’re pioneering cancer treatment. Really, a cancer cure.

So yes, comparatively, the PHMC deal is a bit under-the-radar in terms of Penn’s life-altering advancements, at least as far as non-patients and non-employees are concerned. But the truth is, you can’t talk about life-altering advancements in medicine in 2021 and not also talk about how to improve access and equity, to solve for the many disparities in the healthcare system in the country and right here in Philly, Penn’s backyard.

Likewise, you can’t talk about the Penn Health System and not talk about life-altering advancements in the future of medicine. And the future of healthcare. And the future of our city. Because even in the midst of a crippling, life-rupturing pandemic, that’s still what Penn Medicine is about. The whole point of Penn Medicine is about what comes next—or rather, what could come next or what should come next—and then bringing that vision to life.

And that’s where Kevin Mahoney comes in.

Betting big on Philly

If you were to tell the story of how Mahoney got to this job and this juncture in which he’s easily one of the most influential people in Philadelphia, you’d probably start in the summer of 1978, when he was 18 and suffered a horrific tractor accident. By the time he left the hospital—after weeks and weeks—he knew he wanted a future in healthcare.

He wasn’t cut out to be a practitioner, though: This much he knew even then. “I wasn’t a very good student,” he says. People who know him would tell you that this forthrightness is in character for him; they also use words like easygoing and down-to-earth and thoughtful. He likes to riff on how he once made Millersville University’s “Dean’s List”: “Unfortunately, it was the dean writing me a letter saying that 1.98 is not a sustainable grade point average.” (Note: Today, he has an MBA and a doctorate from Temple University.)

But he was enamored of what he saw in the hospital. “It was so remarkable to me that everyone—the housekeepers, the food-service people, the physical therapists, the doctors, the nurses—all they cared about was making me better. For a kid who was completely self-centered prior to that time, this was just incredible.”

There was another turning point for Mahoney that year, too: He’d find a mentor in Philly developer Bill Rouse, the brains behind the Liberty Towers and the Kimmel Center. As it happened, Mahoney was actually driving the aforementioned tractor while working on one of Rouse’s projects—an office park off Route 29, built on a plot of land that was nothing but cornfields at a time when the idea of working in the ’burbs rather than the city was still something of a foreign concept.

Working for Rouse that summer was revelatory for Mahoney: It was, he says, the first time he understood the concept of vision as a way to paint a picture about what could be, rather than simply what it had always been, to not be constrained by old guidelines. “And unless it’s a law,” Rouse told him, “it’s just a guideline.”

Truthfully, though, if you want a full sense of Mahoney, you might start even before that eventful summer, back to the very beginning in his hometown of Boston, where he was one of eight kids in a big, tight-knit Irish Catholic family. (They moved to Philly in 1963, when Mahoney was four, so, yes, he considers himself a true Philadelphian.) Grow up in a family of 10, he says—a family of 10 sharing one bathroom—and you get pretty good at working with a bunch of people to get something done. You also get used to listening, and negotiating and, in his words, building coalitions.

These skills would prove invaluable down the road, particularly at Penn, where Mahoney has spent the last 25 years of his career. Over those years, he worked in a progression of roles that threw him into just about every part of the health system and helped him develop a rep as a guy who gets big things done, racking up resume bullets that included (not in this order) directing the primary care physician network; acquiring and running Phoenixville Hospital; helping grow Penn Medicine’s regional footprint; starting up an electronic health record system; co-founding Penn Medicine’s Center for Health Care Innovation; and creating the master plan for the Perelman Center for Advanced Medicine and Roberts Proton Therapy Center, the first of its kind in the nation.

He’s also the brains behind the plan for the Pavilion, a project he launched years ago by assembling a team to build a 30,000-square-foot mock hospital wing out of foam in order to get real-life feedback from upwards of 600 practitioners and patient advocates on the design of the place. “This is a typical Kevin story,” offers Vague. “Who else would have ever thought to do that?”

Mahoney, for his part, will tell you that he doesn’t consider himself an expert in any one particular thing. That he spent two-and-a-half decades moving around and learning the ins and outs of all the different parts of the system certainly helped him in terms of seeing the whole picture, he says. But if you’re really talking about his talent—and his current role—well, that all comes back to that ability to collaborate and to rally people around a vision. This is not a small thing, selling the mission in an organization that involves tens of thousands of people who are also part of a massive bureaucracy.

“We gotta get vaccinated. We gotta keep our masks up,” Mahoney says. “But the days are getting brighter, and things are getting better. What I’m most excited about is getting a little optimism back in daily life again.”

But then again, it’s quite a mission that he’s selling. He tells everyone involved with the Pavilion project, from the engineers to the architects to the construction workers: They’re not just building a building. They’re part of the team that’s curing cancer. This is what’s special about Penn, he says.

Vague would tell you that Mahoney’s instincts toward collaboration have been just as key outside of Penn’s walls, where government and insurance companies and the NIH all play a big role in much of what the future of medicine looks like, locally and nationally, at a moment when change is in the air. For example? For some time now, Mahoney’s been working within the insurance world to change the way the hospital gets paid. (For the record, he’s not the only hospital CEO advocating for a better way forward in this realm; he’s not even the only CEO in Philly doing it. In his newish book Unhealthcare, Jefferson’s Stephen Klasko lays out his ideas about taking advantage of this post-Covid, modern moment to create a more consumer-focused model for the long term health of Americans and the industry.)

Mahoney’s push is about shifting compensation for hospitals toward quality outcomes, rather than per-visit compensation (“value-based” rather than “fee-for-service,” in industry terms), and he’s pushing for that change to happen soon. Within the next few years. As he explained in a panel last fall, this prospect isn’t just about good value “but also how do we build an ambulatory safety net where people don’t have to come to the hospitals?”

The seeds of this change were first planted with Obamacare, Vague notes. “But I think Kevin was really one of the first to grab hold of it, to say ‘Our standard is going to be fully resolving a health issue at first point of contact.’” And you can look around and see “this profound change radiating through the healthcare system,” Vague says. “You can see a number of hospitals doing things you’d never have expected, like helping with nutrition, for instance. Because a diabetic patient eating more vegetables decreases the likeliness of them having to visit again soon.” In his view? “There’s a quiet revolution going on there.”

And speaking of revolutions: It’s easy to point to Penn Medicine—home to Carl June, with his pioneering cancer cell therapy; home to Katalin Kariko and Drew Weissman, whose mRNA research laid the groundwork for the Covid vaccines; home to some 2,800 more MD/PhDs researchers working on the next miracles—and talk about progress and vision and the future. This is the mission and the model of the institution, after all: integrating healthcare delivery with research and innovation.

But there’s another advancement that most of us hear about far less often in Philly, even though it’s deeply local, and that’s the money that Penn has poured in as minority investors to the biotech companies coming out of the research conducted at the institution. There’s been a boom of new companies—and new capital—in Philly over the past couple years, as Vague points out, and that’s in large part thanks to Penn President Amy Gutmann and Mahoney, who decided to seriously and strategically invest $50 million in Philly’s growing biotech scene. “At that moment,” he says, “I think they took what was a trend and turned it into a proverbial hockey stick.”

The goal of this biotech investment isn’t just about the science and the mission to advance it, though of course that’s a given. The boosting is also about Philly money. More than a billion dollars in investments have flowed into the city with these startups, Mahoney says. Which also leads to Philly jobs—there have been 318 created so far in the spinout companies from Penn. And all this work in cell and gene therapy? “Those are the manufacturing jobs of this century,” Mahoney says.

“And if I can start a company on Market Street that ultimately cures cancer and creates jobs—good jobs—filled by people in Philadelphia, that’s so much better than that company taking the Penn patent that was developed here and going to Kendall Square in Boston,” he says.

Lastly? Mahoney’s bigtime bets on the Philly science scene are about Philly itself. Our global pull. Our future. “Where we are today versus 20 years ago here bears no similarity,” Vague says. “I think 10 or 20 years from now, Philly will be viewed as a leading city in the world for biotech.” You want to talk about vision? he says. “That is vision.”

Accelerating trends in Covid

Of course, no amount of experience or vision leading up to 2020 helped anyone foresee what pain was coming. Mahoney remembers the last copacetic night before Covid-19 officially knocked the world off its axis. He’d been CEO for less than a year at that point, and stood “shoulder to shoulder” with fellow Penn execs at a ribbon-cutting for a new tower at Chester County Hospital. March 6, 2020. “The last day of normalcy at Penn Medicine.”

We all lived what happened next. We’ve read the stories of what the last year was like for our health care providers and hospital staff and patients and our struggling, grieving city. This human side of it, we all know too well. From a CEO standpoint, it was also watching your “three-to-five-year lens become a three-to-five-month lens become a three-to-five-hour lens.”

Mahoney quickly laid out three priorities for the organization, a.k.a., “the three Ps”: protecting the patients; protecting each other (Penn’s people); and protecting the finances. (Mahoney on the last bit: “I don’t talk about it like we’re a for-profit, but you know the old adage of ‘no margin, no mission’: We can’t do what we’re built to do if we don’t have the fiscal discipline to achieve it.”)

Like most hospital systems, Penn took a pretty major financial hit—they were some $500 million off projection for the year, Mahoney says. Unlike many hospital systems, though, they started out the pandemic with a declaration: Nobody would lose their jobs. And they didn’t: 44,000 people are still employed by Penn Medicine; 44,000 people got paid. (This is in itself quite a feat: Jefferson, the city’s second largest employer, faced cuts in pay and positions, according to the Inquirer.)

Also important to Mahoney was to still make money by the end of the fiscal year, he says—before the bailout. And they did: According to a Penn Medicine spokesperson, before accounting for the CARES Act money, they had an operating gain of $30 million for the year. (With funding? The positive operating margin was $243 million.) Moody’s recently reaffirmed their Aa3 rating. So post-Covid, Mahoney says, “we’re doing well.”

Back to the people for a moment, though: Employment isn’t the only part of “taking care of each other.” The need for behavioral and mental health services came into sharp relief almost immediately in the pandemic; as an answer, Penn Medicine unveiled a digital platform to offer fast access to mental health support for health care workers. In truth, Mahoney says, these ideas were in play before the pandemic—supporting the behavioral and mental and health of their people. “I think Covid brought it all more into the open, to a place where people are more willing to say, I’m under stress.”

“Where we are today versus 20 years ago here bears no similarity,” says Richard Vague. “I think 10 or 20 years from now, Philly will be viewed as a leading city in the world for biotech.” You want to talk about vision? he says. “That is vision.”

This observation—what was already happening in his world is now happening bigger and faster—is a theme for Mahoney. When he talks about Covid’s impact on the healthcare system he runs, and on healthcare in general, he likes to reference a book by Wharton’s Mauro Guillén, 2030, which revolves around “accelerants of trends.”

“So I’ve tried to convince everybody here that there’s no new normal,” Mahoney says. “That what Covid has done is accelerate trends that were already underway.”

Take, for example, virtual healthcare and telemedicine. Mahoney points to COVID Watch, an app the Innovation Center launched at the start of the pandemic that allowed providers to monitor Covid patients at home. “If they were getting sick, we got them in and moved very quickly,” Mahoney says. “So that was also beneficial instead of coming in and sitting in the waiting room for a while.”

Would he call this a new normal? Well, no. People are still going to have to see their doctor face-to-face. But here’s acceleration for you: In the first two weeks of March last year there were 200 telemedicine visits. Then between that moment and mid-February of 2021? It was 1 million telemedicine visit—and it’s not going anywhere.

Here’s something else Covid pushed: the “hospital at home” idea, a.k.a home care. Maybe you read about Penn’s chemotherapy patients whose treatments shifted during the pandemic from days of hospital time to chemo in the comfort of their own homes. That shift was already happening in small trial groups, but Covid grew the experiment into what was essentially protocol. It worked for the patients, Mahoney says. And it’s going to stick.

This change brings with it challenges—namely, right now Penn makes more money treating patients in hospital than at home—but things will have to change, Mahoney says. The “hospital at home” is here to stay, and in fact, this is just part and parcel of what Penn is, do you see?

The point is not about the size of the footprint or the number of beds, Mahoney says. The point is about getting the latest clinical trials, the most advanced possible care, to the best setting for the patient, and revisiting and reimagining what that might look like for all of us.

“Sometimes it will be the in-patient hospital,” Mahoney says. “Sometimes it will be the ambulatory facility. Sometimes, it’s at home … and increasingly that will be on your iPhone.”

Grappling with equitable care

If, going forward, offering healthcare means offering an expanse of options for patients, you can bet, too, that it’s going to be about getting those options to more people, more equitably. Not only did Covid exacerbate and lay bare so many health disparities that are the products of historic, systemic racism, but 2020 was also a summer of reckoning in this country about race and social justice. You’d be hard-pressed these days to find corners of medicine where leaders aren’t grappling with improving equitable care.

This looks like a hundred different things under Mahoney: It looks like data-based research and training, for instance; it looks like a new policy that ties Penn Medicine’s executive pay directly to hospitals’ reducing morbidity and mortality rates among Black and brown patients. It also looks like increasing the colorectal screening rate amongst Philly’s Black citizens, who are 40 percent more likely to die from colorectal cancer than white people. To go about changing that, they’ve partnered with WURD Radio and Independence Blue Cross to mail out screening kits. “And if the test comes back positive, we’ll do the colonoscopy and the workup and bill their insurance,” Mahoney says. “So there’s no cost to the patient. If they don’t have insurance, then we’re absorbing the cost.”

“Economic security is probably the number-one social determinant of health,” Mahoney says.

Right now, Gauthier and Mahoney are also working on boosting Covid vaccine equity in West Philly, Gauthier tells me. Down the road, her hope is that her office can join forces with Penn Medicine to tackle that other public health crisis that’s killing Philadelphians at an unbearable rate: gun violence. She’s hopeful about the prospect. “Not only has Kevin proactively approached partnerships with me and others in the district, but any time I come to him with any idea—around the vaccine, around gun violence—he’s been willing not just to listen, to jump right in.”

It is a hopeful thought for our future. A lot about Penn—those minds! That might! That money!— is hopeful. That’s sort of the brand. It’s also Mahoney’s brand. “He’s an optimist,” Vague says.

That’s not to say he doesn’t worry sometimes about the challenges ahead, particularly when it comes to the fuller picture of healthcare in the region, what with Tower Health and its hospitals struggling mightily. He worries about making sure all people still have access to care. He worries about the general economy, about getting the city opened up, about the impact virtual learning will have on our kids.

But what he’s immersed in right now is more immediate than all that. “I’m trying to talk to everybody about lifting their eyes up to the future,” he says. Like Bill Rouse once did. It’s been quite a year, obviously. Traumatic. Literally nonstop for everyone around him. “And you know, we gotta get vaccinated. We gotta keep our masks up,” he says. “But the days are getting brighter, and things are getting better. What I’m most excited about is getting a little optimism back in daily life again.”

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