Academic medical centers (AMCs) have long served as a cornerstone of US healthcare, advancing clinical excellence, training the next generation of physicians, and driving biomedical innovation. As technology advances, costs increase, and patient needs evolve, AMCs’ approaches are changing—but the missions are unwavering. Throughout his decades-long career, Kevin Mahoney, CEO of University of Pennsylvania Health System, has seen how AMCs have evolved to be even more ingrained in communities and to fulfill their vital role in the ecosystem, seamlessly connecting payers, research centers, and patients.
In this episode of the McKinsey on Healthcare podcast, Senior Partner Dr. Pooja Kumar speaks to Mahoney about how AMCs are approaching the evolving landscape of healthcare, the emergence of AI and augmented reality in clinician workflows, and how to foster vital relationships across the ecosystem. A condensed version of their conversation follows.
AMCs at the intersection of research, care, and community
Dr. Pooja Kumar: What do you see as the most pressing challenges that AMCs face today considering the current workforce strain and shifting patient expectations?
Kevin Mahoney: The pressures are real, and they’re not going to get any easier. We are traditionally an expensive model, and wage inflation and regular inflation are outpacing us. We have to reimagine how we deliver care to bring that cost down; otherwise, we won’t survive.
We also have an opportunity to reimagine medical education. Many of our physicians are in their early or mid-30s before they get their first fully paying job. We need to shrink that amount of time. What new tools could we use? Can we use virtual reality for training? Or can we train people more in AI?
In terms of research, we need to come up with models that create breakthrough therapies our country can afford. If we have a gene therapy and Medicaid won’t pay for it because it’s so expensive, then we have an equity issue.
Dr. Pooja Kumar: How do these systems have to evolve to be indispensable to the broader healthcare ecosystem while providing top-tier care for patients?
Kevin Mahoney: Many academic medical centers like Penn Medicine tend to be in urban cores, which means that not only are we providing advanced medicine, but we also have to be the safety net for the city. As hospitals close around us, the pressure is mounting to take care of more community-level care, which is not our sweet spot. Our sweet spot is advanced medicine.
At Penn, we’re trying to figure out how to get upstream. How can we meet the patient where they are, not just in our emergency room but digitally or through community health workers? On the other end of the spectrum, how do we continue to invent innovative approaches and then make them available to the communities around us?
We also have to get our costs under control and figure out new revenue sources. We’re looking at new models and are working out a joint venture with a med tech developer so we can help invent the technology and open a new revenue stream.
We’ve also spun off 12 to 14 companies in Philadelphia through a health venture fund, which has brought $2.1 billion into the city. They’re located close by, so they’re doing clinical trials and corporate-sponsored trials here. We need to explore additional options without losing track of who we are. For example, should we have more surgery centers? Should we provide more virtual care around the country? Should we offer consumer-paid lab tests for genome sequencing?
Dr. Pooja Kumar: As a leader, how do you manage your attention and your team to contend with the present pressures?
Kevin Mahoney: It’s critical for us to step back and not react to the thing in front of us because it’s constantly changing. A change in one mission may hurt the other missions, so I try to make sure I don’t head down a path only to find I’m in the wrong spot.
The challenge today is the pace. In 2008, during the Great Recession, we could handle the pace of change. Today the pace is overwhelming. When managing the team, it’s important to slow down as the world moves faster.
Technology that creates a big, positive impact
Dr. Pooja Kumar: What kinds of technology do you think have the most potential? What are some examples of technology Penn has implemented that you’re most proud of?
Kevin Mahoney: AI can synthesize the data we get from patients and give it to physicians so they can focus on the important matters. In addition, some surgeries may not be necessary as 3D imaging becomes available and more precise. Technology should drive down costs to improve the patient experience and improve work–life balance for our physicians. I think we need to go into it aggressively and unafraid while making sure to maintain our ethics.
A simple technology we’ve implemented is Heart Safe Motherhood, which is an app that pairs with blood pressure cuffs and some behavioral insights. It has reduced morbidity and mortality in Black women from 11 percent to less than 5 percent. It’s low cost but has a huge impact.
Other technologies I would call out are related to our progress in cell therapy. We are working on an in vivo approach that will drive down costs. We’ve also made advances in flash radiation and radiation oncology to reduce the number of visits patients have to make. Those advances will alleviate the burden of disease for patients.
Dr. Pooja Kumar: How are you counseling your top team, managers, and leaders on how to think about technology?
Kevin Mahoney: Many conversations around AI are about how it will lead to structural unemployment. As one of the largest employers in Pennsylvania, how do we participate in AI without that happening? If AI is going to replace a function, how do we retrain, redeploy, and figure things out for the employees that are displaced? I encourage the leadership team to think about the people being negatively impacted and to have a plan for them.
Dr. Pooja Kumar: How do you foresee clinician training changing?
Kevin Mahoney: I think medical school will shrink to three years and will be where you learn legitimate information. AI and virtual reality will be able to shrink down the length of time it takes to do your surgical training. We’re doing more just-in-time training in hospitals using simulations. I think virtual reality will replace a lot of what happens currently in residency and in the classroom.
Fostering the right relationships
Dr. Pooja Kumar: The relationship between clinical leaders and administrative leaders will become more important. How are you fostering those relationships at Penn?
Kevin Mahoney: It’s important to meet the physicians and the scientists where they are. Go to lectures to learn and hear what’s going on. Catch a couple of the doctors on the way out the door and ask what’s on their mind. The way you stay aligned with your physicians and scientists is simple: Work hard, be authentic, and reach out and talk to people face-to-face.
Dr. Pooja Kumar: What asks would you have for payers as the CEO of a large academic medical center?
Kevin Mahoney: We have a great relationship with our local Independence Blue Cross. It could be even stronger. If we move people out of the hospital, the hospital costs won’t come down without cutting the rates. We both can win, but it doesn’t always have to be adversarial.
So I want payers to be willing to sit down and figure out a way for the payer and the health system to win and for the patient, who is always in the middle, to get a better experience. For example, we came up with a solution to virtually eliminate precertification for radiology using artificial intelligence. It took a partnership with the payer and trust to figure it out.
Be an open and curious leader
Dr. Pooja Kumar: What advice do you have for clinicians who might want to be in a leadership role in an AMC?
Kevin Mahoney: When you’re trained as a physician, you’re trained to know everything about your specialty. Running an academic medical center, I have to rely upon 52,000 employees to help me. These jobs require an incredible amount of hard work. Be kind and burn the shoe leather. People have to see you.
I always say, “Pick your organization first and your job second.” Pick an organization that you’re proud to work at, that has the financial strength to weather the ups and downs, and that has intellectual curiosity.
Dr. Pooja Kumar: Tell me about the journey that brought you to your seat today.
Kevin Mahoney: In 1978, I received a note from college saying I didn’t have a suitable grade point average, so I went to work for a landscaper. While I was cutting a cornfield, I fell off the tractor, and it ran over me. I ended up in the hospital on a ventilator. I was in pain, but I loved every minute of being in that hospital, watching that team work and knowing every employee in that hospital wanted to make me better.
I went back to the college, met my wife, and went on to get two degrees. When I was asked to join Penn, I couldn’t wait to get back into hospitals, particularly academic medical centers. Life throws curveballs; be ready for them. Listen for serendipity, and find someone who can help you be curious.
