By John Garrett
By now everyone has heard that GE Healthcare will become a company separate from GE. GE has decided to focus on the power and aviation core business as a path to a solid future for the company. The initial investor response has been positive. This raises quite a few questions for the health care community. GE has a very large presence in health care worldwide. There will be an impact, the questions are what type of impact, and at what scale?
The GE Healthcare division will be a very large company when it becomes a stand-alone entity. The press release shows it as grossing over $19 billion in 2017. The imaging manufacturing and support is only part of the company. GE Healthcare is involved in manufacturing and servicing equipment for most aspects of patient care. GE even provides multi-vendor service for “in-house” programs. In the world of imaging, they are in general radiology, cath labs, MRI, CT, mammography, nuclear medicine and, through the OEC product line, C-arms. The Lightspeed and Brightspeed CT systems were some of the most prolific systems in that business space.
Even as big as the new company will be, it is unlikely that they can continue to do business as they have in the past. The deep pockets of GE will no longer be available to carry the new company in years where they show a loss. According to the GE statement, available online, the transition should be complete by the end of 2020. That means there is roughly 18 months to figure out what GE Healthcare will look like as a stand-alone company. There are some very important things to consider. If GE Healthcare was performing in a solid manner, GE would not divest themselves of a money maker to improve their financial position. Stockholders would not show enthusiasm for GE getting rid of a cash cow. So the financial viability of GE Healthcare, as it is currently, is suspect. The current CEO will be kept in place to run the new company. This may change by the year 2020, but as of now that is the plan. To keep the same person at the head of a company that is not being successful enough to be kept as part of GE might raise a few eyebrows. At least it should.
This is a pivotal moment. GE Healthcare has the opportunity to flatten the management structure and remove a great deal of overhead. It can become lean and adapt to customer needs. It could become a new leading and innovative company. The question is, will they become that company? Or, will they try the business as usual approach? An approach that has had them released from GE. At the end of the day, they will still have to answer to shareholders. However, the best way to answer to shareholders is to take care of your customer base and ensure you have adjusted to the needs and desires of that customer base. If not, the competitors will have an opportunity to fill that space and make the new GE Healthcare a thing of the past instead of the future.
All of this impacts the medical field – imaging specifically. The equipment you have today in your hospital or imaging center will be supported for some time to come even if it is only by independent service organizations. The question will be, is it good to buy GE in the future? Will the support be there? Will the clinical engineering departments of hospitals support a new company or hedge their bets by buying from other manufacturers to ensure that they don’t get stuck? Will new up-and-coming companies such as Samsung make a move to fill in the space? Samsung is entering the market with a portable X-ray unit as well as ultrasound. Will they be able to invade a space that has been owned by GE in the past? There are a lot of moving parts to this. But there is no doubt, the world of medical imaging will change as a result.
