The Jacobson Legacy
Vanderbilt University Medical Center was at a critical turning point in 1997 when a 50-year-old nephrologist and health care entrepreneur named Harry Jacobson, M.D., took over as CEO.
His predecessor, the legendary Roscoe “Ike” Robinson, M.D., had led the Medical Center through a major growth spurt. But now, because of dwindling reimbursement under Medicare, Medicaid and managed care, “the operating margins for the clinical enterprise were pretty thin,” Jacobson recalled. The first imperative was to cut costs and negotiate better reimbursement rates. That wouldn’t be enough, however, to preserve and strengthen VUMC’s three missions: patient care, education and research. So Jacobson, a farsighted physician-scientist who’s as comfortable in the corporate board room as he is in the laboratory, pursued an ambitious, multi-pronged strategy that can be summed up in one word: growth. “Growth is just the right thing to do,” he told Vanderbilt’s student newspaper, The Hustler. “The research done in academic centers will determine the future of health care.” Jacobson, now 61, retired in June after achieving much of what he set out to accomplish. VUMC not only weathered what he dubbed a “financial perfect storm,” but its growth since then has been nothing short of astonishing.
During the past 12 years that Jacobson served as the university’s vice chancellor for Health Affairs, annual research funding quadrupled to more than $400 million. VUMC’s performance exceeded expectations by nearly every measure – annual net revenue, the number of faculty and staff, space for research and patient care, and national rankings.
“We’re on the cusp of true greatness,” said Lawrence Marnett, Ph.D., director of the Vanderbilt Institute of Chemical Biology. “In proteomics, in chemical biology, in drug discovery, in clinical translation, we’re major players in all of that.”
“Vanderbilt is now viewed nationally as the academic center that is moving the fastest in terms of steps toward more effective science, toward more effective health care,” added Vanderbilt’s informatics guru, Bill Stead, M.D., who chairs the Center for Better Health. “We’re at that stepping stone. Hopefully, we will carry forward and finish it.”
What is it about this out-of-the-box thinker that made Jacobson such an effective leader?
When asked to name his greatest strengths and most enduring legacy, his colleagues more often than not point to his people skills rather than to the bricks and mortar he leaves behind.
“In spite of all his outward success, it is what is inside of him that makes him so special – his character, generosity, high standards, personal warmth,” said Thomas Burish, Ph.D., provost of the University of Notre Dame, who served as Vanderbilt Provost from 1993 to 2002.
“Harry knows the value of reasoned positions, financial projections, data and outcome metrics, benchmarking, and all the approaches that our era values,” Burish continued. “But he also knows that no appeal is stronger than one built upon candor, conviction, fairness, personal relationships and core principles.”
“He’s an inspiring leader,” added Joe B. Wyatt, Vanderbilt’s chancellor from 1982 to 2000. “He supports his people at all levels. He doesn’t undercut them … and he’s certainly willing to stand up for what is right.”
Jacobson admitted that he has the ability to “energize people.” But he added quickly, “I don’t like people to make a commotion over me. It embarrasses me a little bit … I feel like I’m expected to do well, and if I do the right thing and I do well, then I’ve done what I’m supposed to do. It’s not something special.”
Jacobson’s view of the world was forged in the rough-and-tumble neighborhood on the South Side of Chicago where he grew up. Born outside of Munich in 1947, he emigrated with his parents, Rudy and Lisa, and his three siblings when he was 4.
His father had been drafted into the German army during the war and survived a Soviet prisoner-of-war camp. In his adopted land he became an accountant, ultimately retiring as chief tax accountant for Amoco. He challenged his children to do well academically. Jacobson said his parents, who died in 1996, “were very, very proud and supportive of their children.”
The children in their integrated neighborhood were another matter. Jacobson remembers how they picked on his older brothers because they couldn’t speak English when they first enrolled in public school. But rather than angering or frightening him, the experience taught him tolerance. “I just view people as people,” he said. “Prejudice is something I have no room for.”
The only member of his family to go to medical school, Jacobson earned his M.D. from the University of Illinois in Chicago in 1972, and met his wife, Jan, in the laboratory when he started his nephrology fellowship at the University of Texas Health Science Center in Dallas.
Jacobson was recruited to Vanderbilt in 1985. Within a decade he had moved up to the executive suite as deputy vice chancellor for Health Affairs.
Along the way, he held more than $1.5 million in active grant support, published more than 100 peer-reviewed publications and a textbook on kidney disease, served on and chaired national advisory committees, and explored the corporate side of medicine through such companies as Nashville’s Renal Care Group, which he co-founded.
All that prepared him for the grand challenge he set for himself and his team when he became vice chancellor – to transform VUMC into the “No. 1 health system” in Middle Tennessee.
VUMC employed several strategies to achieve the goal. It forged strategic partnerships with physician groups in Williamson County, established the multi-specialty Vanderbilt Medical Group, expanded key service lines like cancer and heart disease, raised the bar on philanthropy (a move that made possible the establishment of a freestanding children’s hospital), improved both the system’s financial performance and its focus on customer service, and launched branding and advertising campaigns.
It wasn’t just about competition for patients and health care dollars. Jacobson – and those who subscribed to his vision – realized that a thriving clinical operation was essential to growing the Medical Center’s research enterprise, and to attracting top-notch faculty and students.
“We owe a lot of our ability to grow as a research enterprise … to the growth of the hospital and the clinics,” Marnett said. “It has been the engine that has driven it.”
Growing the clinical operation was one of the prongs of Jacobson’s strategy. Another was the use of venture capital to encourage development and commercialization of intellectual property.
In 1999, Jacobson helped establish the $10 million “Chancellor’s Fund,” which, in conjunction with the university’s technology transfer office, helped launch 18 companies. A later version, the Academic Venture Capital Fund, nurtured cross-institutional projects including the institutes of Chemical Biology and Imaging Science.
While commercialization in the academic world can raise concerns about conflicts of interest, that wasn’t a problem for Jacobson, say those who know him well.
“He is one of the most ethical individuals you’ll ever come across,” said Thomas Cigarran, chairman of the Nashville-based disease management company, Healthways Inc., who has worked with Jacobson on the Nashville Health Care Council.
“Was he pushing the university to innovate more?” Cigarran continued. “Absolutely. But it was never a real conflict of interest.”
Entrepreneur is not the only label one can apply to Jacobson. Visionary is another.
Jacobson believes that health care reform can be achieved by a “bottom-up” approach, driven by academic medical centers.
“There are other alternative approaches to addressing the health care problems in this country than endlessly pushing reimbursement cuts,” he told federal officials in 1999.
“The technology required to improve the quality and cost efficiency of health care in this country is available. It’s called clinical judgment, evidence-based practice, disease management and disease prevention.”
Biomedical informatics has been both an academic discipline and an integral part of VUMC’s clinical operations since the early 1990s. In a sense, the entire Medical Center has been a laboratory, a demonstration project for the power and potential of health information technology to improve health outcomes that has attracted national, and even international, attention.
“When the president flies to Nashville just to inspect that kind of computer system (as George W. Bush did in 2004), you know that it has influence beyond Vanderbilt,” Cigarran said.
Although Jacobson handed over the reins of the Medical Center to Medical School dean Jeff Balser, M.D., Ph.D., in June, he said he will find other ways to contribute.
“I love health care. I love science. I love the business world. And I think the blend of science, health care and business to really improve the lives of people is a lot of fun,” he said. “I’ll continue to do it.”
Nevertheless, Jacobson’s retirement, announced March 30 in the midst of the most severe economic crisis since the Great Depression, has caused dismay and consternation in some quarters of the Medical Center.
Marnett, for one, isn’t worried about the transition. Balser is “a very smart guy” with “a huge amount of energy,” he said. “He’s going to do really well.”
Stead, too, is optimistic. “Even in this environment it is within our reach to execute on where Harry got us,” he said, “in terms of high performance, in terms of impact, in terms of caring …
“But we will really have to be good.”