Philips Healthcare announced a rather ambitious project on July 1: The company will partner with a large health system in the South to transform the health care delivery model. The agreement is worth approximately $300 million, the largest of its kind for Philips.

Philips will provide Georgia Regents Medical Center, a public academic health system in Augusta, Georgia with a comprehensive range of advanced medical technologies and imaging equipment, planning and maintenance services, and consumer products with pre-determined monthly operational costs over a 15-year period.

"This alliance marks the first time a hospital and manufacturer have come together at this level to manage every aspect of the health care system. This goes beyond buying and selling; this is about running a whole system, not just a single department," Steve Laczynski, president of Philips Healthcare Americas, told DOTmed News.
Georgia Regents includes a children's and adult hospital with 700 bed capacity; outpatient clinics that serve half a million people; an emergency department; a level 1 trauma center for children and adults; a cancer center; and a long-term acute care hospital.

"The march we're on is to align ourselves in a way that provides health care from a better, faster, less expensive platform — that means you have to standardize things and remove waste, duplication, redundancy and unnecessary variations any way you can and in all areas," David Hefner, CEO of Regents Medical Center, told DOTmed News.

Hefner has been on this march for almost a decade. He's tried forging similar alliances before with OEMs but the timing was never right. He said some might attribute this new model to health care reform — which rewards quality and seeks to control costs — but he's been talking about cost control long before it became a buzzword in health care.

"You can say it's health care reform, but I think it's the deficit. We can no longer afford our bad behaviors, we have to start making different choices like every other industry makes," said Hefner.

The alliance will impact all areas of the medical system, including radiology. Philips will own, manage and service all of Georgia Regent's imaging equipment. According to Hefner, this will allow Georgia Regents to accelerate a lot of replacements and upgrades that they wouldn't have been able to make on their own.

Philips, in turn, will be able to develop a new business model that's more applicable to this era of reform.

"Our attractiveness is that we can partner with them [Philips] and help them develop a new business model that they can sell in the marketplace," said Hefner.

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