When giants meet
GE Healthcare and Microsoft pool their resources for a joint venture, building off their respective strengths to bring innovative clinical technology to market
REDMOND, WA – It isn't every day that two of the biggest corporations on the planet decide to partner to launch a third, spin-off company. But that's exactly what happened this past December when GE and Microsoft put their heads together to establish a new health IT firm.
Company officials said the venture – which will be helmed by GE Healthcare IT's Michael J. Simpson – will make the most of the two firm’s combined strengths: Microsoft’s prowess at building platforms and "ecosystems," upon which with GE Healthcare will develop new and innovative clinical applications aimed at population health.
Now all the new company needs is a name. At press time, that information was still tightly under wraps. But as Brandon Savage, MD, chief medical officer at GE Healthcare IT told us upon the deal's announcement, a lot of thought was being put into it. "As you can imagine, with two big global companies, and a new venture with ambitions to sell the product globally, the complications of getting the right name are pretty significant," he said. "We're hoping to announce that in early 2012." In other words, it's a safe bet the logo of this new 700-employee company will be known to the world by the time HIMSS12 kicks off in Las Vegas on Feb. 20.
In the meantime, care providers and industry observers are sorting out what the venture means – and looking forward to what the partnership might bring to the clinical market.
Under the deal, the new company will get all of Microsoft's health IT technologies, including its Amalga Unified Intelligence System and Vergence and expreSSO, single sign-on and context management tools that were folded into its portfolio with the acquisition of Sentillion in 2009 – but not including its HealthVault personal health record, which will stay under the Microsoft brand. GE will bring its eHealth HIE technology and Qualibria clinical knowledge platform.
Analysts offered mixed views. Sean W. Wieland, senior research analyst at PiperJaffray, said the deal was emblematic of trends in the post-HITECH Act healthcare IT industry, "whereby the opportunity to monetize the data eclipses the opportunity to sell software." Noting that opportunities will be "greater once every doctor is using an EHR than it is today selling those doctors EHRs," he predicts ample room for growth in "helping doctors make better decisions at the point of care, where 80 percent of all healthcare spending takes place."
Chilmark Research analyst John Moore noted how the new deal, coupled with the sale to Orion Health this past October of Microsoft’s Amalga HIS, signaled that the Redmond giant is essentially "completely pulling out of the clinical market."
That was disappointing, he wrote, arguing that "unlike the legacy HIT vendors in this market, Microsoft could lay the claim to some neutrality and potentially build out an Amalga-based ecosystem platform." Still, he reasoned, "business is often not kind to those that have an altruistic bent and in this case Microsoft simply made a clear-cut business decision to unleash an asset that was not meeting internal metrics despite what some believe may have been an investment in excess of $1 billion in the last five years to build-out the Health Solutions Group."
For his part, Nate McLemore general manager of that Health Solutions Group insisted that Microsoft is "really looking at this as a way to double down on healthcare. We're increasing our investment, with GE, in making sure Amalga and Vergence and expreSSO, go forward. We're continuing to develop and expand HealthVault. And we also develop and sell a whole lot of technology in our core Microsoft stack to healthcare IT companies and directly to hospitals, health systems and providers around the world."
As for GE Healthcare, "our core businesses are still going strong," said Savage, and "still very much focused on providing software for specialists – radiologists, cardiologists, as well as EMRs and revenue cycle applications. Just like Microsoft, [we're] doubling down on healthcare transformation: investing in where healthcare needs to be so the applications we have in the core business are able to play a part in a more connected healthcare system, where healthcare IT is not just about digitization but more about transforming care."
Said McLemore, "I think the way to think of it is that both companies recognize that we can get there further and faster if we join our efforts."
That the two companies have an aligned vision as well as complementary assets has been apparent to the firm's customers, he added – noting that "This makes perfect sense," and "Gosh, I thought you guys should have done this a long time ago," were typical of the reaction.
Savage points to the Mayo Clinic, which has helped GE develop the Qualibria platform and has worked with Microsoft on projects such as the Mayo Clinic Health Manager PHR. "They were incredibly happy to know that both of their investments are going to come together in a way that will really support their operations to create a stronger healthcare community that they can drive."
He adds that the move towards "connecting groups of doctors and nurses to create communities and care teams" and shifting that care delivery from being episodic to continuous, is "not the kind of change you necessarily want to do with just one company."
In the near term, the change means working on tools to help "complement existing EMRs," said Savage. "We're focused on applications around surveillance – making it easier to look at a population of patients and find out which of them need a particular type of care."
Other areas to be targeted in the coming year or so include healthcare-associated infections (HAIs), hand-offs and care transitions, hospital readmissions and health information exchange – which Savage wants, through partnerships with organizations such as Geisinger Health System, to "take to the next level, which is population health management."
The new company will build off the Amalga platform, using it as foundation from which to bring clinical applications to the market more quickly. Key to that, said McLemore, is that "the platform and solutions we deliver need to be open" so outside developers can develop apps using a common set of APIs on top of it.
After all, he said, "Even though we're two of the largest companies in the world, we believe it's going to take a lot more than just GE and Microsoft to apply the kind of innovation that healthcare needs."