GE lends radiology tech to Philadelphia hospital in contract deal

GE Healthcare CEO Jeff Immelt

Earlier this year, GE Healthcare ($GE) CEO Jeff Immelt cited hospitals as a potentially lucrative source of growth for the company, pointing to a shift toward major contracts amid healthcare reform. Now, the company is taking a big step in that direction, inking a deal with Philadelphia's Temple University Health System (TUHS) to improve the medical center's radiology technology while helping it cut costs.

As part of the 7-year agreement, TUHS will upgrade its radiological imaging equipment using GE technology and will draw on the company's data storage and retrieval and service contract consolidation and consultation services to improve scheduling and workflow. Neither side is spelling out financial terms, but the deal includes certain "financial incentives" that will drive the pair toward "realizing shared objectives," including a goal of saving $39 million over the contract period.

"Like many health systems throughout the country, Temple University Health System faces clinical, operational and financial demands," Immelt said in a statement. "GE Healthcare understands these market challenges, and we are dedicated to helping customers deliver the best outcomes in today's environment."

The deal "represents a new chapter in value-based healthcare contracting strategies," Larry Kaiser, CEO of TUHS, said in a statement, as GE and the medical center work together on what could become a more traditional business model. And GE is not the only company looking to get in on the trend.

In June, med tech titans Royal Philips ($PHG) and Siemens Healthcare scored big hospital bundling contracts, echoing a growing demand for value-based healthcare. Philips nabbed a half-billion-dollar, 15-year contract with WMCHealth, a 7-hospital health system based in Valhalla, NY, aiming to improve the provider's healthcare delivery services including radiology. Siemens landed a €110 million ($124 million), 15-year contract with Canada-based William Osler Health System, providing management services and solutions for medical imaging equipment.

In the meantime, GE is working hard to boost its offerings to outshine its competition. In June, the company rolled out a new device to track radiation dose data from its computer tomography (CT) systems. Earlier this month, GE got an FDA blessing for its low-dose CT device for lung cancer screening, deepening its dive into diagnostics imaging.

- read the statement

Special Reports: The top companies in med tech: 2014 revenue results - GE Healthcare | Top 10 med tech R&D budgets in 2014 - General Electric

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