New Siemens consulting division targets healthcare efficiency

May 8, 1996

Vendor hires GE executive to run new programMultimodality vendor Siemens Medical Systems has formed a newdivision called Siemens Managed Healthcare Services to offer businessconsulting services to radiology departments and hospitals

Vendor hires GE executive to run new program

Multimodality vendor Siemens Medical Systems has formed a newdivision called Siemens Managed Healthcare Services to offer businessconsulting services to radiology departments and hospitals concernedabout streamlining their operations in response to managed care.Siemens group vice president of imaging systems Thomas Millerannounced the division's formation at last month's DiagnosticImaging industry conference in San Francisco.

Siemens, of Iselin, NJ, formed the division as a way of bringingto the healthcare industry the company's expertise in reengineeringbusiness operations. As a major multinational corporation, Siemenshas found that it must constantly retool its operations to increaseefficiency and compete in various business environments. Thatexperience is transferable to healthcare, according to Miller.

Miller acknowledges that a factory is a far different enterprisethan a hospital, however. To that end, Siemens has gone outsidethe company and has hired experienced executives who have reengineeredhospitals.

"We have acquired the expertise of people who have donethis in over 20 institutions: providing (facilities) with benchmarkdata for (their) institutions and realizing an average savingsof over $1.6 million in institutions within which we have conductedthis program," Miller said.

Some of those executives are former GE personnel who had ahand in the Milwaukee vendor's capital asset management partnershipwith the Columbia/HCA hospital chain (SCAN 3/15/95). Heading thedivision is vice president Reinhard Schmidt, while another keyexecutive is Dee Wilson, manager of asset management programs.Both are former GE employees.

Miller emphasized the scalability of the division's offerings,which range from solving an individual department-level problemto developing a large-scale program for a national delivery system.The division's programs will be marketed by the unit's dedicatedsales specialists.

A typical reengineering program developed by Siemens ManagedHealthcare Services can involve up to three phases, which representincreasing levels of involvement in a facility's operations:

** An operations assessment of a facility, based on computermodeling, that considers the hospital's cost structure, revenuestreams, and utilization and market trends. The assessment providesa facility with a list of problem areas and possible solutions.

** A consultative services phase, in which the vendor helps implementprocesses recommended by the operations assessment.

** A risk-sharing partnership, in which a payment scheme is implementedbetween the division and the facility that allows both to sharein the financial and operational benefits that accrue from thepartnership.

"What we need to do is use this new division to targeta single customer benefit, and that benefit is to reengineer (facilities)to improve quality, enhance revenues, reduce costs, and ultimatelyenhance profitability," Miller said.

Siemens began putting the division together 14 months ago andhas been offering pilot programs for about the past six months,Miller said. One site is Allegheny Health, Education and ResearchFoundation (AHERF) in Pittsburgh, PA. Siemens and AHERF have entereda broad-based risk-sharing partnership in which Siemens helpsthe institution exploit new opportunities in radiology while reducingcosts. Miller described Siemens' compensation structure for thecontract as one that is capitated and tied to patient-based measurementsrather than modality usage.

In the future, Siemens hopes to employ new technologies toincrease efficiencies further. For example, Siemens is one ofthe largest manufacturers in the world of smart cards, which canbe used to store patient data and replace the paper-based recordscurrently in use. Siemens is employing smart cards in health networksin Europe and is examining how they can be used in the U.S.

"If you look at a typical patient's journey through ahealthcare delivery system, at almost every diagnostic departmentor way station they are confronted with duplicate paperwork whichhas to be filled out, with numbers that have to be reentered,"Miller said. "By replacing those forms with cards and readers,one can make that process much more efficient."

Ultimately, Miller would like to see Siemens Managed HealthcareServices used as a tool to help healthcare institutions managetheir treatment of disease more efficiently. Miller admits thatthe company -- and anyone else in the healthcare industry -- isa long way off from that goal. But Siemens is counting on informationsystems technology to give it the tools to realize its potential.

"We believe that disease management is where the trueefficiencies can ultimately be gained in healthcare," Millersaid. "We are working to put together an information technologyinfrastructure that will enable disease management to take place."