Medical Device Daily
December 8, 2016
Erlangen, Germany-based Siemens AG has been working for the last few years to transform its health care business as part of a five-year plan. In the push to revive health care revenue growth, the imaging giant is focused on offering hospital systems more and better services to expand upon and strengthen purchasing relationships.
The latest step in that services effort is a four-year research partnership with New York-based health care provider Northwell Health, which includes 21 hospitals and more than 500 outpatient practices. The pair will conduct research projects aimed at improving clinical effectiveness and patient outcomes via the implementation of population health analytics.
The Siemens health care business, renamed Healthineers last spring, is already operated within the conglomerate as a separate business and is slated to be spun-out in an IPO
Under the deal, Siemens Healthineers will offer research funding to Northwell's Imaging Clinical Effectiveness and Outcomes Research (iCEOR) Program; it will also dispatch employees to work jointly as part of that program. This is the first time either Siemens or Northwell have done this sort of research partnership.
Northwell, which is the largest health care provider in the state of New York, expects to gain high quality research that will inform its health policy decisions – and potentially improve individual patient health as well as overall population outcomes while at the same time lowering the costs of care.
The New York-based health care provider and Siemens have a longstanding clinical relationship that evolved into this partnership as Siemens looks to help its customers find the most effective ways to use diagnostic imaging.
"The Initial work is on applying advanced diagnostics to acute stroke as an earlier intervention; that has led to some improved outcomes," Siemens Healthineers North America SVP August Calhoun told Medical Device Daily. "Early indications are that the patient mortality is significantly improved. We are trying to determine what's the best modality for immediate follow-up after stroke. Ultrasound is faster, but is CT or MR better – what is the best diagnostic to use to make the next decision in the care path?"
Preliminary data show that whether an acute stroke patient should receive computed tomography or magnetic resonance imaging (MRI) varies depending on patient specific characteristics. This suggests that an initial exam would be helpful in determining which type of diagnostic imaging will work best for a given patient.
Ultimately, the partners hope to develop a better, more individualized standard-of-care for the use of diagnostic imaging after stroke, as well as potentially in other treatment areas as well. The idea is to develop a repeatable method that can be systematically applied to offer improved patient outcomes.
"We have been ramping up our focus on helping our customers. As we define new services, we collaborate with our customers to find what they need. What's unique here is that this is a study on the performance of diagnostics in the overall care pathway," said Calhoun. "We should get good insight into how to leverage diagnostics in stroke care and other areas –finding the optimal way to use them and to leverage that to drive out care variation, to spread the use of that standard of care as widely as possible. We can't do that ourselves; that's why developing this with Northwell is very important."
The partnership is part of a broader push by Healthineers to better understand the needs of their hospital customers – and to offer them more and better services to attend to them, such as the application and implementation of population health analytics.
"The more hospitals become commercialized, become chains, become a powerful purchasing area – the more you need to be integrated inclusive and specific," noted Siemens President and CEO Joe Kaeser on a November earnings call. "And that's what we have understood and that's why we have been acting for two years the way we do," he concluded.
Siemens Healthineers committed earlier this year to expanding not only data-driven services, but also its molecular diagnostics and therapeutic device offerings. All of this has driven its recent strategic deal activity – and is intended to form a basis to better court hospital systems.
"Transformation in the health care market continues with a paradigm shift now emerging. There is a clear temptation from a transaction-oriented, product business to solving multi-hospital system challenges worldwide," summed up Kaeser. "We do see changes in paying schemes – from fees to service to managing outcome based on health. As a consequence, health care providers and our competitors drive consolidation in the market to cope with the strong ongoing changes."
ONE OF SEVERAL RECENT DEALS
The Northwell news follows another Healthineers population health deal dating back to October with IBM Watson Health. The five-year population health management (PHM) partnership enables Siemens to market PHM products and services from IBM Watson to its own customers, including value-based care analytics and reporting and patient engagement data.
Specifically, Healthineers is offering IBM Watson Care Manager, a new analytical tool aimed at integrating clinical and individual data to offer insights to care givers on the management of chronic conditions. Siemens' plan is to layer in consulting services to aid in the implementation of value-based healthcare using these data analytics from Watson Health.
Since Siemens announced in May that it would rename its health care business and expand upon it, the conglomerate has pursued several strategic deals to enhance its position accordingly. These include the acquisition in November of open connectivity player Conworx Technology GmbH to enable the connectivity for more than 100 point-of-care devices, as well as the May purchase of Germany's Neo New Oncology AG as an entrance into molecular diagnostics in oncology.
The conglomerate will continue to be active strategically in health care, Kaeser said. "If you want to try to understand and anticipate what Siemens is up to – building fascinating health care out of a great health care business – you need to think about the inclusiveness of relevance in the health care segment and the relevance in the hospital. That's how you need to think about it. So, whatever helps to be inclusive of products and services and building platforms," he summed up in response to an analyst query on what to expect from future dealmaking.
Thus far, investors seem to approve of the Healthineers reboot and the company's direction more broadly, sending shares up more than 15 percent since early May when the health care business was renamed and Siemens specified its new direction for it. Siemens has yet to define a specific timeline for a Healthineers IPO, although it has committed to retaining a majority stake in the business for the long-term.