Inside Jefferson’s Mission to Transform Care

If you have faced a surprise bill at the pharmacy or have struggled to find a doctor who is accepting new patients, you’ve experienced America’s health care crisis firsthand. “It’s one of the toughest health care environments in memory,” Joseph G. Cacchione, MD, the CEO of Jefferson, which includes Thomas Jefferson University, Jefferson Health Plans, and Jefferson Health, the Philadelphia region’s largest health care system, said. “Costs, especially labor, pharmaceuticals, and supplies, are rising faster than revenue. In Pennsylvania, commercial [private insurance] reimbursement rates are among the lowest in the country, and Medicaid rates fall far short of covering the cost of care. That creates a structural deficit we must address.”

Health care delivery is facing a crisis. Hospitals require significant overhead in order to function. They must, for instance, employ thousands of facilities staff and administrators in addition to doctors, nurses, pharmacists, and technicians. For the past five years, the cost of running these operations has continued to climb while commercial insurance reimbursements have stagnated.

“No one’s health outcome should be determined by their ZIP code or income.”

In the face of this upheaval, local research-focused health care providers like Jefferson play a pivotal role in reshaping the future of medical care. Jefferson, for instance, is able to effect change because of its role as a not-for-profit provider, its academic arm and its research acumen, as well as its mission to improve lives. “Our goal is to build a more connected ecosystem, one that prioritizes outcomes and sustainability,” Cacchione said. Jefferson is doing so by reducing costs of the health system, advocating for value-based care, integrating digital tools, and focusing on meeting community needs.

How We Got Here

An annual study projected that the cost of treating patients will hold steady at 7.8% to 8.5% in 2026, the highest sustained rate since 2012. The unsustainable burden on health systems stems from dramatically increased costs of drugs, declining reimbursements — particularly from commercial payers — and rising labor costs.

“The biggest challenge has been our Medicaid managed-care plan. Last year, soaring pharmacy costs, particularly due to GLP-1 medications, led to a $170 million loss [for the health plan],” Cacchione said. Currently, one in eight American adults say they have taken a GLP-1, a class of injectable drugs prescribed to treat obesity, type 2 diabetes, and other conditions like high blood pressure, high cholesterol, heart disease, and others. In fact, gross spending on these weight loss treatments increased by more than 500% between 2019 and 2023, reaching $71.7 billion in 2023. While Jefferson continues to cover the use of these drugs, that’s not the case elsewhere. Though GLP-1 drugs can result in improved outcomes for patients, particularly those with obesity and diabetes, only nine states provide coverage under their state Medicaid programs. The high price tag and increased demand for these drugs simply puts too much pressure on employer-funded health insurance plans.

Rising staffing costs also have downstream effects throughout the health care ecosystem. In 2023, the health care sector employed more than 17 million people, making it the largest employment sector in the United States. Yet in Pennsylvania, there is an acute health care workforce shortage. More than 112,500 home care shifts remain unfilled monthly, due to staffing shortages. Compensation may be part of the reason; the state’s Medicaid reimbursement for caregivers is unusually low: Pennsylvania pays caregivers $20.63 per hour through Medicaid, compared to Ohio’s $28.96, Maryland’s $25.58, and West Virginia’s $25.44. Nationally, projections forecast a shortage of 187,000 physicians and nearly 208,000 registered nurses by 2037, driven in part by looming retirements. A study in 2021 found that 46% of clinical physicians were over the age of 55. Fewer physicians and nurses drive up wages, and these costs are passed down to patients, through the care they receive and the premiums they pay.

In the face of these unrelenting headwinds, Jefferson is leveraging its position as Pennsylvania’s second-largest nonprofit system to find solutions to get patients the treatments they need, affordably.

A Plan Forward for Health Care

Jefferson believes that the path forward for greater health outcomes is access to care. “No one’s health outcome should be determined by their ZIP code or income,” Cacchione said. Preventative care remains the clearest and most sustainable path to better outcomes. “In practice, that’s about creating more access points and advocating for fair reimbursement so [health systems] can serve all populations,” Cacchione said.

Though it is a regional provider, Jefferson is one of the 15 largest nonprofit health systems in the country. It is unique in that Jefferson also includes a university and a health plan. As a result, the organization can unite care delivery, care financing, education, and research all under one roof. “That allows us to take discoveries from the lab, train the next generation of clinicians, and deliver breakthroughs directly to patients in our communities.” Cacchione said. As Jefferson iterates on a process, it also creates a roadmap for other hospital systems to emulate.

For Jefferson, transformation starts with reforming how we finance health care services. “We need a shift toward value-based models that reward outcomes and sustainability,” Cacchione said. In value-based care, providers earn rewards for keeping patients healthy through preventative care, rather than by filling hospital beds. Value-based care would also include overhauling how hospitals are reimbursed by federal programs. “Financing should reflect the true cost of care, particularly for vulnerable populations. That’s the only way to ensure health systems can keep serving their communities,” Cacchione said.

Jefferson is pursuing this vision on multiple fronts: advocating for higher reimbursements with state and federal legislators, internally diversifying services and expanding its footprint, and maintaining its mission of localized care. The organization’s merger with Lehigh Valley Health Network, in August 2024, was transformative, Cacchione said. It provided scale to negotiate more effectively with insurers, vendors, and partners. “The real impact goes far beyond contracts,” Cacchione said. “It’s about even greater access to care for the region. We’re shifting toward a care model that emphasizes quality, access, convenience, and efficiency.” This combined system now has nearly 65,000 employees across Pennsylvania and New Jersey. For Jefferson, that means more urgent care, more virtual visits, and more opportunities to provide specialty care throughout the region that may not have been previously available. “Jefferson Health aspires to be the most accessible health system in the country,” Cacchione said.

Using AI Tools to Improve Care

Jefferson also believes that improving care means improving physician well-being. A 2016 study found that doctors spend nearly half of their workday on desk work, almost double the time they spend with patients. And, they often spend another one to two hours at home after work each day on data entry. One solution to reducing physician homework is to utilize AI technology tools.

This year, Jefferson launched an initiative to reclaim 10 million clinician hours by 2028, by implementing AI and automation in their digital systems. One such application is an “ambient scribe” tool that automatically outputs visit notes based on a recording of a patient visit. “These tools free up time for clinicians to focus on care, not paperwork, and help us operate more efficiently,” Cacchione said. According to Jefferson, these new strategies will align with AI governance best practices and build bias auditing and human oversight into their deployment. “Used responsibly, it’s a tool that allows our clinicians to spend more time with patients,” Cacchione said.

“Jefferson Health aspires to be the most accessible health system in the country.”

Beyond the exam room, Jefferson is investing in data analytics to track population health, identify gaps in care, and personalize treatment plans. This technology allows the health system to see the full picture across inpatient, outpatient, and digital touchpoints and to respond with agility.

Prioritizing Humans

By reducing friction between payers and providers, advocating for value-based care models, and investing in digital tools, Jefferson aims to build a system that’s smarter, faster, and more connected while improving the patient experience. “We never lose sight of the human connection,” Cacchione said. “Our approach is ‘high tech and high touch,’ leveraging innovation to enhance, not replace, the relationships that define great care.”

Whether that’s women’s health in the Lehigh Valley, enhanced emergency care in Philadelphia, or expanding services through the Sidney Kimmel Comprehensive Cancer Center into New Jersey, Jefferson is working to align its services with each community’s needs. “Our responsibility is to listen, respond, and ensure every community has access to the right care,” Cacchione said. As health care costs continue their upward trajectory, Jefferson’s bet is that innovation, scale, and mission-driven care can coexist, and that the model built in Philadelphia can offer a blueprint for academic health systems nationwide.