GE's multivendor service coup forces competition to regroup
Published on Diagnostic Imaging (http://www.diagnosticimaging.com)
GE's multivendor service coup forces competition to regroup
March 29, 1995 | GE [1], Vendors [2]
Siemens and Picker are developing similar programsThe multivendor service deal forged this month
between GE HealthCareServices and the Columbia/HCA hospital chain has other scannervendors
shaking their heads. GE's competition is examining
Siemens and Picker are developing similar programs
The multivendor service deal forged this month between GE HealthCare Services and the
Columbia/HCA hospital chain has other scanner vendors shaking their heads. GE's competition is
examining the agreement closely to determine its effect on equipment purchasing while at the same
time moving forward with multivendor programs of their own.
Siemens Medical Systems of Iselin, NJ, plans to meet with Columbia/HCA officials to better
understand the agreement's impact on their relationship. In the meantime, Siemens plans to
cooperate fully with Columbia/HCA, according to Siemens group vice president of imaging systems
Tom Miller.
"I sent instructions to each and every one of my employees to continue to treat Columbia/HCA
hospitals as if the GE agreement did not exist," Miller said.
But the deal does exist, to the chagrin of other vendors. Its provisions are sweeping and cover
equipment service, purchasing and asset management (SCAN 3/15/95). Prior to the deal,
Columbia/HCA had used a combination of preferred-vendor agreements with major companies,
namely Picker, GE, Siemens and Philips, to meet the needs of its approximately 200 hospital
members.
Picker has already felt some impact from the deal. Bob Trebar, manager of business development
and marketing at the Cleveland vendor, said Columbia/HCA executives have canceled several
equipment acquisition contracts that were in process with members of the hospital chain. Siemens
saw one contract canceled, but that deal was going to expire before the GE agreement was put in
place, according to Miller. Siemens has several deliveries of imaging equipment scheduled for the
upcoming months and Miller expects they will be fulfilled.
The prospect of future deals with Columbia/HCA members does not look bright for companies other
than GE. The preferred-vendor agreements that Siemens, Picker and Philips had on the books with
the hospital giant appear to be on the way out. The GE relationship is comprehensive and includes
purchasing, according to James Olsen, vice president of materials management systems at the
Nashville-based hospital chain.
Olsen played a key role in negotiating the GE deal, along with the chain's senior vice president for
financial operations, Samuel Greco. Olsen refused to say which modalities will be put exclusively in
GE's pocket, although he acknowledged that the company will have an advantage.
"We expect that a lot of the modalities will be sole source and in those cases, (GE) will get the
business," Olsen said.
SCAN has learned that Columbia/HCA has informed Picker that the contract will make GE the
sole-source provider on CT, MR, vascular systems, radiography and R&F. Picker has also been
informed that GE will be a preferred provider for other modalities.
GE's competitors may not be shut out of Columbia/HCA hospitals entirely, however. GE executives
have stated that the company intends to consolidate service agreements through its program, and
may not necessarily have all service provided by GE technicians (SCAN 8/31/94). That might mean
cutting contracts with other vendors or with independent service organizations. GE executives were
not available for public comment on their plans for servicing Columbia/HCA hospitals.
Planning a response. Within the next three weeks, Picker plans to make the first of several
announcements about a new multivendor service program of its own. Picker also plans to debut an
asset management program, according to Trebar.
Siemens is working on a comprehensive equipment, service and consulting program as well. Public
details about this program are sketchy, but Miller confirmed that it is being developed and will soon
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GE's multivendor service coup forces competition to regroup
Published on Diagnostic Imaging (http://www.diagnosticimaging.com)
be unveiled. A multivendor service program is not particularly difficult to implement, he said.
"One simply contracts to someone else the bits and pieces of service that do not involve one's own
equipment," Miller said. "That is often done by the hospitals themselves, and to take over this job is
not a big deal."
Asset management, however, is another subject. When a hospital relies on a vendor for advice on
the use and acquisition of equipment, there is potential for bias on the part of the vendor. Siemens
will offer such a program, but will keep an eye on conflict-of-interest concerns.
"We want to do it in such a way that it doesn't look like the fox watching the hen house," Miller said.
"One interpretation of this GE agreement is that the fox could be a very sated fox."
The deal between GE and Columbia/HCA is an indication that health-care providers are replacing
their ambivalence toward equipment vendors with a more trusting attitude, according to Olsen.
"One of the things we are trying to get past is looking at suppliers as product producers and to start
looking at them as resources that we can use to accomplish our goals, which are primarily improving
quality and reducing the cost of care," Olsen said.
For the GE/Columbia deal to succeed, the hospital chain will have to open its books to GE and
provide access to the number and type of exams being conducted, the methods and equipment used
to perform those procedures, and the special circumstances surrounding individual institutions.
This is a point of contention among GE's competitors. Vic Baerman, manager of service, marketing
and sales at Picker, believes there may be a conflict of interest if GE works with hospital chains that
compete with Columbia/HCA. To serve as an adviser to Columbia/HCA, GE will need access to
proprietary information. Baerman doesn't believe that GE could serve in a similar capacity with the
chain's competitors.
Olsen noted that many particulars of the contract still need to be worked out and those specifics are
not expected to be finalized for another four months. These details will be hammered out by a
committee now being assembled by Columbia/HCA executives, Olsen said.
Disclosures:
Source URL:
http://www.diagnosticimaging.com/articles/ges-multivendor-service-coup-forces-competition-regroup
Links:
[1] http://www.diagnosticimaging.com/ge
[2] http://www.diagnosticimaging.com/vendors
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