Health Care In The States

Health Law Fosters A New Kind Of Business Partnership In Georgia

By Jim Burress, WABE

July 16th, 2013, 6:14 AM

Medical equipment manufacturers operate largely on a “supply and demand” model: Hospitals buy their multi-million dollar machines, use them for a few years, and then the process starts again.

But Philips Healthcare and a hospital system in Georgia are betting on a new business model, one that has risks and rewards for both the hospital and the manufacturer.

Philips is now going to provide the Georgia Regents Health System with everything from equipment and training to maintenance — potentially even light bulbs and tooth brushes.  But as part of the 15-year, $300 million agreement, Philips also gets something it hasn’t had before: complete access.

“We believe there’s true value in understanding more of the workflow of the institution,” says Steve Laczynski, president for Philips Healthcare Americas.

The partnership is on view in a radiology lab at Georgia Regents Medical Center in Augusta where doctors have just finished performing a heart procedure on a child. Radiology tech Scott Stevens is among a half-dozen folks prepping the room for the next patient, someone who needs followup care after treatment for an aneurism.

“We’re going to make sure things have gotten better,” Stevens says.

All of this is happening in a huge, new suite with all kinds of diagnostic machinery, a monitor as big as a refrigerator and even mood lighting.  And they’re all Philips products.

Under the partnership, about a dozen Philips employees will work in-house at Georgia Regents. They’ll sit in on meetings, offer ideas and develop systems based on one goal: improving patient outcomes.

Philips sees opportunity in the new federal health care law.  The law ties some hospital payments to keeping patients healthier.  So if more patients get better, in less time and at lower cost, the hospital pays Philips a bonus.

That’s what’s in it for Philips.

What’s in it for Georgia Regents is one answer to a complex puzzle, says hospital CEO David Hefner.

“Our problem is we have to deliver health care better, faster, and less expensive. What I wanted was a vendor or manufacturer that actually was that kind of partner that would stand in our shoes and think from our point of view, not just sell me more equipment,” Hefner says.

If Philips is successful, it hopes to make this deal with other hospitals.

“I know you’ll see more of these alliances form, because it’s where health care needs to go,” says Laczynski of Philips.

Because the concept behind the partnership is so new, both parties have asked regulators to weigh in on the deal.  That should happen within the next 18 months.

This story is part of a collaboration that includes WABE, NPR, and Kaiser Health News.

2 Responses to “Health Law Fosters A New Kind Of Business Partnership In Georgia”

  1. Lena Conway, Group Health Insurance Underwriter says:

    Bravo! That’s the kind of changes we all hope to see with the Health Care Reform. Having hospitals and medical equipment manufacturer to work together to bring down cost with great efficiency benefits themselves and patients in the long run. Now, let’s see what the insurers can do to provide good benefits with affordable premium by averaging premium increases for 5-6 years in the future. Taking risks for some initial cost increase while waiting for the claim cost risk to spread out and level out a few years down the road will benefit members and in the long term, insurers will begin to make their profit again. If the insurer can do that, along with hospital’s cost reduction strategy, the Affordable Care Act will be a success for all.

  2. Mick says:

    A recent survey found 34 percent of likely voters want Congress to try to fully repeal ObamaCare. Only 8 percent of likely voters said Congress should delay or defund the law.
    By contrast, 52 percent of likely voters said Congress should either let the law take effect or make minor changes to improve it. So, if most likely voters say leave it alone or make minor changes to the new law, why is the House of Representatives constantly trying to repeal or defund Obamacare? Opponents to Obamacare in Congress keep saying that they have something better than Obamacare but when asked to produce it, they have nothing to show. If they have something better, let’s see it! LET’S SEE IT! SHOW IT TO US! PRODUCE SOMETHING! Either put up, or shut up!