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Aligning forces

by Loren Bonner, DOTmed News Online Editor | March 01, 2013
From the March 2013 issue of HealthCare Business News magazine

This past month there's been a lot of lessons about business in the world of health care.

For one, almost every week, a story comes out about a hospital merger. The research firm Fitch Ratings recently reported that U.S. hospital consolidation activity is the highest it's been in a decade, largely the result of health care reform. This makes sense as hospitals need to think strategically about their bottom lines when reimbursement is being reduced and new payment models are forcing them to improve efficiency and move out of the silos that patient care has been operating within for so long. I assume it's also a way to stay competitive since patient satisfaction reigns supreme under health care reform.

But equipment companies are also aligning strategically in order to enhance the health care side of their business, particularly for imaging. A good example is the recent decision by the Korean electronics giant, Samsung, to acquire NeuroLogica Corp., a U.S. company that manufactures CT, ultrasound, PET, radiation therapy and MRI equipment. For the past few years, Samsung has been working to gain a foothold in the medical imaging equipment arena, and this acquisition only represents the latest effort by the company to expand into imaging.

Based on its latest earnings report, Philips - another company synonymous with consumer electronics - seems to be focusing more on the health care side of its business as well. While it is not so much a coming together of two separate companies like Samsung and NeuroLogica, internally Philips is concentrating more on manufacturing and marketing imaging equipment, an area that has become more profitable for the company in recent years. They are seeking to grow this side of their business more and selling off the remnants of their audio and video business division.

There are even more recent announcements of "partnerships" between imaging companies that want to work together to grow their presence in the medical imaging market. Just like hospital mergers, these types of consolidations by equipment manufacturers represent the rapid transformation of our health care landscape, and they are certainly something we're paying attention to.

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