Philips recently announced a half billion-dollar fifteen-year contract with a seven-hospital WMC Health system in Valhalla, New York. The agreement aims to improve healthcare delivery services in radiology, cardiology, neurology, oncology and pediatrics. Philips will achieve these improvements by providing on-site clinical and business consulting services.
Along with Philips, General Electric has been eager to get into this high priced consulting game. Jeff Immelt, GE’s CEO has been citing hospitals as a lucrative potential source of revenue growth for his company and, under his leadership, GE has been gradually shifting towards toward developing major contracts with hospitals and healthcare systems. Like Philips, they claim they will help improve clinical, financial and operational outcomes for healthcare.
When I read about these types of contracts, I am forced to ask some questions. For example, will WMC Health in Valhalla, New York be paying a half billion-dollars to Philips so that Philips can recommend imaging, monitoring, and telehealth products? If so, does WMC Health seriously expect Philips to be objective and recommend competitors’ products? One could argue that the half billion-dollar agreement also covers consulting services to improve healthcare delivery. While these kinds of improvements are necessary to make systems more efficient and effective, what kinds of expertise does Philips, whose primary business is manufacturing and not healthcare delivery, bring to the table? We need to ask the same questions of General Electric. Will they recommend that hospitals purchase competitor’s products? What expertise do they offer in terms of making hospitals operate more efficiently?
I realize that every industry occasionally encounters problems whose solution may require a consultant’s expertise. However, WMC Health’s website boasts a “comprehensive network of more than 250 partners, thousands of physicians and a work force of nearly 10,000”. With thousands of physicians and a workforce of nearly 10,000, why do they not have employees with sufficient talent, intelligence, and collective experience to figure out how to be more efficient and effective without paying a half billion-dollars to consultants? Is it because they have not hired the right people? If Philips, a company that is not in the business of delivering healthcare, is able to hire talented people as consultants, WMC Health should at least be able to do the same.
Hospitals across the nation including systems like WMC Health are already struggling with the burden of managing high healthcare costs. Rather than pay high priced profit making outside consultants, hospital executives should be hiring department managers and directors who are qualified and capable of improving their own internal operations. They can start the process by assuring that when openings for department managerial positions occur, they do not promote employees into those positions simply because of seniority or likeability. The can start by seeking out those who are best qualified to solve problems and improve department operations.
Until hospital executives learn to hire capable managers and directors who demonstrate creativity and innovation, they will not be able to solve their own problems. They will continue paying increasingly high fees to outside consulting groups who, like the CEO of General Electric see hospitals as a lucrative source for financial growth. Meanwhile healthcare costs will continue to be an increasing national burden.
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