General Electric Co. Tuesday said it is investing $2 billion over the next five years to build software that could improve operational and clinical processes in the health care industry.
Hundreds of millions of dollars are at stake as hospitals upgrade their computer systems in order to meet new federal guidelines mandated by the Affordable Care Act. GE is hoping to cash in on some of those upgrades by jump-starting the development of health care systems and applications. The company plans to use the funds to improve existing applications and develop new software to support a health-care sector whose technological requirements have ballooned with increased the digitization of patient information.
Hospitals are using federal incentives to upgrade their IT systems by implementing electronic medical record systems and other tools to improve patient outcomes. Jan De Witte, CEO of GE Healthcare IT and performance solutions, said the investment is driven by the increased digitization of health-care operations, as well as economic and regulatory pressures that require hospitals to become more efficient. “Today, many health-care systems are fighting for survival,” Mr. De Witte said. “They have razor-thin margins.”
The investment is aligned with the company’s broader “industrial Internet” strategy, which it hopes will keep its industrial products relevant in a digital age. It is outfitting seemingly everything it builds, from engine turbines to hospital dropboxes, with sensors and software that can provide customers with data useful to their businesses. GE has already committed $1 billion towards this strategy, and Mr. De Witte said it must further “step up” its software capabilities in support of it.
When patients are discharged from hospitals their bracelet tags are placed into a sensor-based GE box, which alerts staff to clean the rooms. These dropboxes inject efficiency into a complex and time-consuming process, said Mike Swinford, CEO of GE Healthcare’s global services business by shortening the amount of time beds are empty after a patient has been discharged. “Now that we’ve got time and location information… we’re starting to unlock some pretty big productivity opportunities for the health care providers,” Mr. Swinford said.
Judy Hanover, an analyst who covers health care for research firm IDC, said hospitals are streamlining health care processes to earn federal funding at a time when budgets are tight. “It is an important focus of the attention” of hospitals, she said.
Some of GE’s investment is allotted for improving clinical operations. The company is building a version of medical imaging software that can run in the cloud. Mr. De Witte said this will boost hospital operations by freeing hospital IT staff from maintaining the software on local servers. “Cloud capabilities will allow for more efficient infrastructure spend,” he said.
GE declined to reveal future applications it plans to develop with its investment. But the company said it will continue to invest in health care in the future.
The GE Healthcare division isn’t developing these systems on its own; the division is getting help from GE’s centralized software development center, based in San Ramon, Calif., where the company builds software tools and development frameworks to support GE’s business lines. Bill Ruh, vice president of GE’s global software center, said the investment underscores the importance the company places in increasing the intelligence of its products through sensors, software and the machines that connect them. “As a result of the industrial Internet, what you’re seeing from [GE Healthcare] is a doubling down that says they are going to increase their spending to reflect that opportunity,” Mr. Ruh said.
