GE’s purchase of Lockheed Martin unit demonstrates vendor’s commitment to PACS

Unit to be merged into GE's Integrated Imaging Solutions business

GE Medical Systems this month served notice that it is ready to take the PACS market seriously. After nearly a year of negotiations, the Milwaukee vendor completed its acquisition of Lockheed Martin Medical Imaging Systems, one of the few PACS vendors that has been successful so far in implementing full-scale hospital PACS networks.

GE plans to make few changes to the corporate structure of the Lockheed Martin business, according to Anthony Lombardo, general manager of Integrated Imaging Solutions, GE's PACS unit. The Lockheed Martin unit will be merged into Integrated Imaging Solutions, but will remain located in the Chicago area. GE does plan to move the business out of its current headquarters in Hoffman Estates, IL, where it shares a building with the nuclear medicine business of Siemens Medical Systems.

Ironically, the Lockheed Martin unit at one time belonged to Siemens, as one of two PACS projects the German vendor had in operation, the other being its Sienet line. Siemens sold the unit to Loral Aerospace, which in turn was acquired by Lockheed Martin last year.

GE plans to retain all of the 130 employees in the Lockheed Martin business, including Michael Baker, its chief executive at the time of the sale. In an interesting twist, Baker now reports to Lombardo, the executive he replaced when Lombardo left Lockheed Martin to join GE last year (SCAN 6/19/96).

In making the acquisition, GE was primarily interested in accessing Lockheed Martin's personnel and their expertise in developing large PACS networks, Lombardo said. GE's work in PACS has been limited primarily to modality-cluster networking that is closely tied to the company's imaging scanners. By merging Lockheed Martin's PACS experience with GE's sales and marketing muscle, the company should be able to put together a formidable product line for potential customers.

"What we wanted to do was accelerate our own portfolio and understanding by integrating (Lockheed Martin's) intellectual content and experience base with our large experience in how to integrate the diagnostic imaging modalities themselves," Lombardo said.

GE and Lockheed Martin began discussions of an acquisition last summer, Lombardo said. Word leaked out about the potential deal several months later (SCAN 9/25/96), and in December it appeared that discussions had broken down over the price GE would pay for the unit. Obviously, the two sides were able to come to an understanding.

GE pursued the deal because of its belief in the potential of the market for healthcare information technology, Lombardo said. That belief was also the catalyst behind GE's agreement to buy a 19.9% stake in ALI Technologies, a Richmond, British Columbia, developer of an ultrasound miniPACS product that will be integrated with Lockheed Martin's Vantage PACS line (SCAN 4/2/97).

"We recognize that (PACS), and the healthcare information market in general, is a vibrant and growing market," Lombardo said. "This was not a program to acquire an installed base for service revenue. This (acquisition) was basically to take (Lockheed Martin) and build it into a global business."