CEO change at GE may mean delay or cancellation of GE Healthcare spinoff–for good or ill

The well-publicized and unvarnished dumping of GE‘s CEO John Flannery after only 13 months has led a leading research analyst to predict that the planned GE Healthcare spinoff will be delayed or even halted. Analyst Jim Corridore of CFRA stated on CNBC that incoming CEO Lawrence Culp, a recent board member who was CEO of Danaher, a scientific, industrial and healthcare conglomerate, may decide that the division should stay. 

At $19 billion in revenue with a profit of $3.4 billion, 15.8 percent of GE’s total sales and 43.2 percent of its operating profit in 2017, the wisdom of a GEHC spinoff always seemed doubtful. The selloff was in line with Mr. Flannery’s strategy of refocusing on GE’s industrial and energy business. However, this was not going terrifically well, at least in the BOD’s view, with a sluggish turnaround, shares dropping off the S&P 500 and the Dow Jones Industrial Average, projections of missing year-end targets, activist investor Nelson Peltz hovering, and exacerbated by problems at GE Power with its new line of natural gas-fired power turbines. Perhaps a few were doubly offended by the selloff of the corporate jets (relative pennies) as well as the expensive and frankly hard-to-justify corporate HQ move from Connecticut to Boston.

Mr. Culp is apparently well-thought of, having retired after a highly successful 14-year run at Danaher, but he has his work cut out for him. He will also need to quickly judge whether to continue the GEHC spinoff process or bring the cattle back into the fold, as the drive was well underway down the trail. Somehow, spinning off 40 percent of your operating profit seems strategically foolish given a plummeting share price.

A jaundiced opinion. Perhaps as an outsider, Mr. Culp can change the ‘death star’ culture at GE. This Editor, in her brief encounter with GEHC as part of an acquired company (Living Independently Group, developer of QuietCare, circa 2008-9) found their business practices and many of their people to be both ruthless and self-referential to the point of stumbling blindness. The LIG acquisition was part of an ill-considered and perhaps ego-driven experiment by GEHC’s CEO at the time to get into home, remote monitoring, and assisted living health, a developmental, small-scale, early-stage area. It was obvious that GE’s vaunted methodology and hospital-based acute care experience were worse than useless when it came to understanding what is still a developmental area. The home health businesses were sold, closed, or (in the case of QuietCare), spun off into a joint venture. That CEO and a few other people leveraged it well; LIG’s employees, shareholders, and others at GEHC did not. 

As Star Wars fans know, Death Stars are destroyed in the final reel.

GE’s change at the top puts a healthcare head first

This Monday morning’s Big News was the stepping down, after 16 years, of GE‘s CEO Jeff Immelt effective August 1, and the rise of GE Healthcare’s head, John Flannery. The focus of most articles naturally was the fate of GE. Mr. Immelt may have steered the company through a severe recession starting in 2008, but he managed to lose about a third of the company’s value in the process. Expect some changes to be made in Boston. “I’m going to do a fast but deliberate, methodical review of the whole company,” Flannery told Reuters in an interview. “The board has encouraged me to come in and look at it afresh.” In an earlier call with investors, he said the review would have “no constraint.”

Mr. Flannery is a 30-year GE veteran, head of Healthcare since 2014, and previously head of GE India, its equity business in Latin America and GE Capital in Argentina and Chile. According to Fortune, GEHC is 15 percent of GE’s total business and in recent years has been smartly up in revenue. They have partnered recently with UCSF on predictive analytics, Boston Children’s Hospital on a pediatric brain scan database, and Johns Hopkins of a more efficient hospital bed allocation process. Also is an example of telemedicine remote diagnosis using a GE Health portable ECG device connected to the Tricog smartphone app to take a reading in India which was diagnosed in San Diego.

Usually healthcare CEOs become CEOs of other healthcare companies–witness the rise of one of Mr. Flannery’s predecessors, GE veteran Omar Ishrak, as CEO of Medtronic.  Fortune’s healthcare reporter interviewed Mr. Flannery two weeks ago–more of this interview will be published according to the author. (But hasn’t as of June 21!)

Walgreens partners with Chicago health tech incubator MATTER (US)

Walgreens, the US retail pharmacy part of Walgreens Boots Alliance, on 20 December announced its own alliance with Chicago healthcare incubator and innovation community, MATTER. This Editor believes it is the first retail partnership with a health tech-focused incubator or accelerator in the US; most of these partnerships are with angel networks, VCs, health system venture arms or large commercial healthcare partners such as Qualcomm, Allscripts or GE Healthcare. Walgreens’ contribution will be to mentor and collaborate with MATTER entrepreneurs. Reportedly they have or have had more than 150 startups in their program. They are also part of Chicago’s push to slice itself some health tech cake versus cities like San Diego, Palo Alto, Dallas, Boston and New York via the recently launched Health Care Council of Chicago (HC3), which was co-created by MATTER and Leavitt Partners. Hopefully, Walgreens will get some of their $140 million back via their Theranos lawsuit ending their blood testing misadventure [TTA 17 Nov, Ch. 24] and spread their bets with legitimately promising startups. Press release, ChicagoInno

GE Healthcare gets into accelerator biz with five.eight

Having tip-toed around the accelerator action with StartUp Health Academy (GE Ventures), GE Healthcare (GEHC) is taking the full dive in with five.eight, named after the 5.8 billion people worldwide (citation not provided) who lack access to quality, affordable healthcare and need tailored approaches. Up to 10 startups in the initial program will be sourced from four social impact investors – Acumen, Aavishkaar-Intellecap Group, Unitus Seed Fund and Villgro. The five.eight funding will be up to $50 million, with each startup funded up to $5 million. The first startup in the program is Tricog, a Bangalore-based startup focused on improving survival rates in India by decreasing the average time between symptoms and treatment of heart attacks. Of course this ties into GEHC’s business in emerging markets, which is their Sustainable Healthcare Solutions, their “affordable care portfolio of high-value, low-cost technologies and healthcare delivery solutions for emerging markets.” HIT Consultant, HealthcareITNews

Care Innovations’ Slovenski, 23andMe’s Schwartz move to Healthways

Breaking News: Healthways, an online wellness program company based in Nashville, this morning announced that two executives well known to many of us in digital health have joined them. Sean Slovenski, CEO of Intel-GE Care Innovations, is now their President, Population Health Services. Steve Schwartz, their new SVP Strategy and Corporate Development, joins the company from VP Business Development and Strategy, 23andMe.

Mr Slovenski’s track record in 2.5 years at CI certainly impressed this Editor (formerly with the developer of their behavioral telemonitoring system bequeathed from GE Healthcare, QuietCare) with turning around the company from an outpost of Intel and GEHC having difficulty transitioning from ancient technology (remember the Intel Health Guide?) to a telehealth platform dubbed Health Harmony. He also put together a team that engineered multiple academic and health system alliances, along with an interesting turn into home digital health certification. While he came to CI from health insurance giant Humana in Louisville Kentucky running their behavioral health and wellness businesses, his prior experience includes both entrepreneurial turns at his own company and with smaller companies. He most recently engineered a Louisville outpost of CI [TTA 14 Oct 15]. Since Mr Slovenski is still listed on the CI website as CEO, this may have been a quickly executed move.

Mr Schwartz’s business development background includes long stints at two large healthcare companies, Allscripts (EHRs and practice management software) and LabCorp (lab testing). He weathered 23andMe’s FDA troubles and headed up their B2B sales area. Healthways release

Unusually, Healthways is a NASDAQ traded company that closed at $12.11 today in a down market. It’s old (in our terms) having been founded in 1981, becoming publicly traded ten years later. Its last round of venture financing was $20 million from CareFirst BlueCross Blue Shield in October 2013 (CrunchBase). Healthways has a fairly new CEO as well, who joined last August and obviously feels comfortable adding to his team.

GE Healthcare acquires health consultancy

GE Healthcare announced on Monday that it has acquired a US healthcare consultancy firm, The Camden Group. [grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/11/GE-Healthcare-logo.png” thumb_width=”150″ /]Founded in 1970, The Camden Group advices US healthcare organisations such hospitals, health plan providers, medical groups and ACOs and will become the US business unit of GE Healthcare’s international consultancy GE Healthcare Partners.

The Camden Group has been expanding for some time and acquired Health Directions LLC in January of this year for an undisclosed price. By acquiring The Camden Group GE Healthcare will get access to a range of ongoing customers. The $18bn GE Healthcare business announced a $300M commitment two months ago to create a Sustainable Healthcare Solutions unit covering emerging health markets in Asia and Africa.

The price paid for the acquisition of The Camden Group has not been disclosed.

GE Healthcare staying together: CEO (updated)

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/04/2000px-General_Electric_logo.svg_.png” thumb_width=”150″ /]It’s ‘black and white’ but not GE blue all over! During an investor conference Wednesday, GE Healthcare’s CEO John Flannery insisted that “Bottom line is we have been black and white that all aspects of healthcare are part of our portfolio,” reported in Reuters. Investors have questioned the flatlining of both revenue and profit and the fact that GEHC doesn’t seem to fit well in the engineering/manufacturing bent of the Immelt-ized GE.

The speculation by investors and we in the healthcare press is rational. Earlier this year, GEHC announced the phaseout of the Centricity Enterprise (hospital) EHR. [TTA 15 April] Healthcare Financial Services and the services it would provide were also up in the air. Currently it lends to healthcare entities including hospitals and other health facilities to purchase equipment (made by GE) and real estate/facilities (not made by GE). Initial indicators was that GE would continue to finance what it sells. The real estate financing then is questionable, and undoubtedly an issue for healthcare facilities, as GE Capital has been sold. GE also sources funding for healthcare innovation through the Healthymagination Fund and GE Ventures, and of course has an interest in the Intel-GE JV, Care Innovations. What shape this financial arrangements will take in the future is not clear from the available information.

Also announced, according to Biospace, is $1 billion funding over the next five years for education to reach more than two million healthcare professionals worldwide–physicians, radiologists, technologists, midwives, nurses, biomedical engineers–geared to local needs. It will include new clinical, product application, technical and leadership training and education. A forward commitment of this magnitude does seem to confirm that GEHC is in the healthcare game.

GE moving out of the hospital EHR business–and healthcare lending?

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2015/04/2000px-General_Electric_logo.svg_.png” thumb_width=”100″ /]Updated. Spring cleaning at GE continues that may affect healthcare more than EHRs. Neil Versel catches at HIMSS, if not an exclusive, close to it, by finally getting a GE exec to admit the awful truth–that they are phasing out their Centricity Enterprise (hospital) EHR. Versel: “It’s now helping customers with a “graceful transition over a number of years,” said Jon Zimmerman, general manager of clinical business solutions at GE Healthcare.” Even more remarkable, that decision was made three years ago. MedCityNews also updated their article to highlight some of their recent problems with Intermountain Health; we’ve also noted that UCSF converted to Epic after 12 years (see our Weekend Must Read).

The GE Capital exit may affect healthcare too. The other and more major part of the spring cleaning–their exit from GE Capital with the sale/spinoff of assets over the next two years–was announced over the weekend (Bloomberg). Their Healthcare Financial Services lends to healthcare entities including hospitals, life science and in senior housing/health facilities. It also houses the Healthymagination Fund, the capital source for GE Ventures, its early stage developmental arm for healthcare, software and energy. According to The Wall Street Journal, GE will retain healthcare financing to support what it makes in its GE Healthcare unit: ultrasound, imaging, patient monitoring and diagnostics industrial equipment, down to the Vscan (yes! it’s still there). We would bet that GE Ventures is safe. But does this mean that its healthcare real estate unit within Healthcare Financial Services, which lends to senior housing, skilled nursing and other medical properties, is on the block, especially as GE this weekend completed the sale of its real estate holdings? What else, we wonder, will GE sell at the right price to pull up share price–and in the longer term, the future of its manufacturing in areas like major healthcare equipment which have been facing a declining and heavily competitive US market?

Exiting the hospital EHR business makes sense for GE, but what else will it entail? While it retained a solid footprint of vendor loyalty and satisfaction (more…)

Music, art app for Alzheimer’s patients; diagnosing brain performance

GE Healthcare has developed an iPad app, MIND, for patients with Alzheimer’s and other neurological disorders which presents favorite music, music videos and a virtual art gallery. The aim is to stimulate the brain, evoke emotions and promote social interaction.  This extends the pioneering research from New York City’s Institute for Music and Neurologic Function‘s Music and Memory program, which provides personalized music on iPods for those with both cognitive and physical challenges in long-term care to improve quality of life and reduce anti-psychotic drug use. GE release. Website.

Another approach to brain diagnosis and therapy for Alzheimer’s, stroke and brain hemorrhage may be pioneered by Multineurons. This startup has developed a head-worn sensor device that works with an iPad app, WakeUp, for non-invasive brain diagnosis and therapy. It measures speed (connectivity of neurons), fitness (neuroplasticity) and robustness – at 10 different points in the brain. Testing is planned to start in a Swiss rehabilitation facility this summer. MedCityNews

New diabetes telehealth trial in Mississippi (US)

A new telehealth trial for diabetes patients will be recruiting patients in Mississippi this spring. Known [grow_thumb image=”http://telecareaware.com/wp-content/uploads/2014/01/ummc_aerial.jpg” thumb_width=”150″ /]as the Diabetes Telehealth Network, the trial is planned to provide a classic telehealth service for up to 200 patients for a period of 18 months.

This trial is a result of a collaboration between several public and private organizations: the Mississippi Governor’s office, University of Mississippi, North Sunflower Medical Center, GE Healthcare, Intel-GE Care Innovations and C Spire.

The recruited trialists will be provided with a broadband connected tablet PC which will have software to enable daily medical measurements to be transmitted to a specialist team at the University of Mississippi Medical Center in Jackson. A press release states that the measurements will include weight, blood pressure, and glucose level and these will be monitored by the clinical staff at (more…)

Well someone thinks telehealth is good news!

Medtronic has just announced a $200m takeover of Cardiocom, the telehealth device maker.  If you can get through the paywall, the WSJ article is here (updated link not paywalled–Ed. Donna)FierceMedical quotes Medtronic as saying that “At-home monitoring is a proven method of reducing the rates of hospital readmission…and that translates to savings for payers, providers and governments.” First area of joint working is expected to be heart failure. Recent US regulations on Medicare, and increasingly insurance payers, penalize hospitals for 30-day same-cause repeat admissions. Medtronic press release.

Editor Donna: The announcement of Medtronic’s (#4 in worldwide revenue) acquisition of Cardiocom (both Minnesota-based companies) created quite a stir in the US as Medtronic is a ‘traditional medical device’ company best known for its implantables: cardiac shunts, stents, heart valves, pacemakers, insulin pumps and interestingly, a wide range of neurostimulators for different conditions. Now with the acquisition of Cardiocom, Medtronic moves into the post-implant/post-discharge/post-diagnosis chronic condition management continuum– not only into telehealth via Cardiocom’s devices and hubs, but also their clinical and care management systems. $200 million in cold cash is a fair bet even though Medtronic’s market cap is north of $55 billion. Medtronic has to see the opportunity to make a bottom line difference to providers and payers. It is also reacting to a narrowing in its profitable core market–medical devices are now taxed, there have been recent product defect-related ‘scandals’ tarring the industry, and there is pressure to reduce pricey device costs to fit a cost-constrained environment, driven by the new healthcare ‘scheme’ (in both the British and American English senses!) Forbes‘ David Shaywitz has a smart take on it today (though he won’t hold his breath for the pharmas to follow), as well as VC TripleTree’s Chris Hoffman ‘connecting the dots’ and coming up with what we’ve been talking about for some time–integration making sense. It is also most definitely a shot over the bow for major competitors such as Alere, Bosch and Philips plus a raft of smaller companies which have been working with a scattering of hospital discharge areas, integrated delivery systems, ACOs and home health agencies, looking nervously over their shoulder–and other leading medical device companies such as Stryker, BD, Baxter and yes….GE. (Bosch also sued Cardiocom on patent infringement this time last year [TTA 7 Aug 2012]; presumably as this suit was not announced as settled or decided, Bosch is now dealing with a company its own size!)

It also should be noted that Medtronic’s CEO, Omar Ishrak, is well acquainted with home health. Mr. Ishrak was formerly the CEO and president of GE Healthcare through mid-2011–and the driver behind making what was an ultimately failed bet in getting GEHC into home health. That was in 2008-9 with a tiny company called Living Independently Group, developer of a telecare system called QuietCare, which ultimately went to the Care Innovations JV with Intel. (Disclosure: I was head of marketing at the time of the acquisition.) Like GEHC, Medtronic is acquiring a closely-held company in a very different line of business with drivers quite unlike its own; they are retaining the former CEO as a general manager of the division but whether other management or the brand name will survive is not disclosed.

Whilst on the subject of telehealth devices, Heartwire reports a meta-analysis of 52 studies that shows that just measuring your blood pressure regularly results in a significant reduction in both systolic and diastolic levels after six months. Sadly the paper itself in the latest issue of the Annals of Internal Medicine is behind a paywall so it’s not possible to try to understand how the final comment in the synopsis of the paper on the Annals website that: “Additional support enhances the BP-lowering effect.” fits with the comment in Heartwire that “Low-strength” evidence from 13 studies comparing self-monitoring plus additional support vs self-monitoring alone “failed to support a difference” between the two strategies.”

Meanwhile back in the UK, Medvivo has become the first company to be accredited to the telehealth elements of the TSA’s Integrated Code of Practice. Sadly the TSA website will only release the Code to members (TTA isn’t one) or those aspiring to achieve accreditation (TTA fails on that one too) so it’s not possible to make meaningful comment. However the prospect of a Battle of the Codes is looking up with word from Malcolm Fisk that the final version of the European Code of Practice for Telehealth Services will be available for all to read and download on the TeleSCoPE website within a month. There has been talk of a third code being developed too…