IBM & Aramark Partner | China Tariffs Go Live | GE L.A. CEO Jailed

“Sadly, that is the core story of the toxic combination of activist investors and mergers, acquisitions, and divestitures masquerading as strategy in the modern economy.”

– The Harvard Business Review’s, Roger L. Martin, on the sources of GE’s decline and eventual split-up. This statement could be about dozens of companies.

 


The Imaging Wire

 

IBM and Aramark’s Service Partnership
IBM and Aramark announced a partnership intended to help healthcare providers support their connected medical devices, presumably combining IBM’s healthcare technology support solutions with Aramark’s healthcare technology management operations. Although details on the partnership are limited, the announcement highlighted a solution that can help proactively identify when an MRI or X-ray machine requires service or is reaching end-of-life, suggesting that imaging devices will be a major focus. However, the partnership will likely cover all applicable devices, and the companies assured that they will continue to evolve to support “future clinical enterprise IT challenges.” The combination of IBM’s support solutions and Aramark’s service network seems like a good fit and should provide the companies with opportunities to cross-sell into their respective clients and approach new prospects with a unique service message.

 

HBR on GE’s Fall: Activist Investors and Reckless M&A to Blame
The Harvard Business Review gave its take on what happened to GE, attributing the company’s decline to a combination of “clueless, but deep-pocketed, activist investors” and “mergers and acquisitions folks masquerading as strategists.” The main “activist investor” in question is Trian Partners, which made a $2.5 billion equity investment in GE in 2015, and within two years helped force-out longtime CEO Jeff Immelt before getting Trian CEO Ed Garten a seat on GE’s board. Meanwhile, numerous GE executives fall into the “M&A masqueraders” camp, first trying to expand through years of buy-high acquisitions before embracing sell-low divestitures as a turnaround strategy after Flannery took the reins in 2017. HBR also cast some shade on GE Healthcare’s near-term prospects, suggesting that Philips and Siemens are positioned to make competitive gains while GE Healthcare executives spend the next two years managing its spin-off from GE. HBR isn’t the first to raise these points about GE’s decline, but its analysis is among the most critical seen in some time and should be viewed as valuable advice to other companies in danger of M&A mistakes or opening board seats to the wrong people.

 

Intel Survey Foreshadows Healthcare AI Adoption
An Intel and Convergys Analytics survey of 200 US healthcare leaders revealed a common expectation that AI will expand across healthcare. The highlight of the survey was the revelation that 53% of healthcare executives anticipate widespread AI adoption within the next five years (only 11% said it would take more than 10yrs), with 37% of all leaders claiming that they already use AI in at least a limited capacity (77% for clinical use, 41% operational, 26% financial). The executives were well-aligned in identifying the expected benefits of AI, suggesting that it will improve predictive analytics (91%), patient care (88%), and medical diagnostics (83%). Executives identified a lack of trust in AI as the most likely adoption barrier, with a solid minority of executives responding that many patients (36%) and clinicians (30%) won’t trust AI. Intel prescribed a number of measures to overcome these trust issues, including addressing AI’s “black box” perception, leading with AI areas where clinicians are most open to change, highlighting the benefits of AI, and giving input on AI regulations.

 

Good News and Bad News for GE in Latin America
The bad news for GE is its new Latin America CEO, Daurio Speranzini Jr., was arrested (along with 21 others, plus 44 search warrants, and $307m in frozen assets) as part a Brazilian corruption probe. Armed with the awesome code name, “Operation Resonance,” the probe alleges that a group of 33 companies unfairly won Rio-area public healthcare contacts between 1996 and 2017. The good news for GE is it appears that Speranzini’s involvement in the scheme occurred while he led Philips Medical Systems Brazil from 2004 to 2010, reinforced by the fact that Philips’ headquarters was included among the 44 search warrants and Philips’ former Brazil sales leader was among the 21 arrests. Stuff like this is more common in Latin America than many people up North may believe, and this Brazilian crackdown isn’t really a condemnation of GE or Philips’ global business ethics, although it’s a good reminder to meticulously vet executive candidates before naming them as CEO of a continent-wide division.

 

China Tariffs Kick-in, Trade War Ramps-up
The long-awaited China tariffs kicked-in on Friday, immediately subjecting $34 billion in Chinese imports, including a range of medical imaging equipment and components, to 25% import tariffs. The US’ China tariffs were matched by China with equal tariffs on US-made products, prompting Trump to threaten additional tariffs on over $500 billion in Chinese imports, suggesting that a more serious trade war may be eminent. The tariffs and their potential impact on the US medical imaging industry has been widely covered in The Imaging Wire and across industry and national publications, but the fact that they were not canceled by an 11th hour negotiation is likely news to the optimists among us. As manufacturers brace for the impact of these tariffs, MITA once again called on the Trump Administration and policymakers to exempt medical imaging products and components from the tariffs, suggesting that the tariffs would cost American manufacturers $138 million this year. Given that the conversation has shifted to imposing tariffs on nearly all imports from China (~$500b), the exemption of medical imaging is starting to look like a long-shot, suggesting that US imaging manufacturers should start executing their post-tariff business plans, and preparing for the economic headwinds that a full-blown trade war might bring.

 

 


The Wire

 

  • Siemens Healthineers and the Asan Medical Center in Seoul developed a new pediatric cardiac CT scan technique that captures images at the same pace as a patient’s heart rate and breathing rate. The new technique will reportedly allow children to breath normally during the scanning process (unlike ECG triggering), with lower radiation doses (unlike ECG gating), without the need for general anesthesia.
  • HeartFlow’s fractional flow reserved from CT (FFRct) Analysis solution, which creates computerized heart models to treat coronary diseases, will be covered by UnitedHealthcare, making it available to an additional 45 million beneficiaries and increasing its US total to 235 million people.
  • Neural Analytics announced the CE clearance of its NeuralBot System, a robotic system that automatically adjusts the positioning of the company’s Lucid M1 Transcranial Doppler Ultrasound System for the evaluation of brain blood characteristics to triage neurological diseases. The NeuralBot System’s CE clearance comes roughly one month after it achieved FDA clearance.
  • A recent Axios editorial suggested that Trump’s replacement of Justice Kennedy on the Supreme Court could give states far more power to cut Medicaid and limit private entities’ (like healthcare providers) ability to sue Medicaid for coverage decisions. Kennedy often broke from his conservative peers in cases regarding Medicaid, and a shift in philosophy from Kennedy’s vacated SCOTUS seat could lead to major changes in state-provider Medicaid dynamics.
  • The U.S. Department of Energy and UCSF are collaborating to apply precision medicine AI to traumatic brain injury (TBI), developing an intelligent assistant that provides tools to improve radiologists’ interaction with images, created by using DOE supercomputers to analyze CT and MRI studies.
  • Australia’s Lucas Heights nuclear reactor suspended production last week due to a mechanical fault, creating concerns that it may lead to a shortage of the medical isotope Technetium-99m (Tc-99m) in Australia and perhaps across the Asia Pacific region.

 

 


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