Microsoft and GE Healthcare JV Deal


Last week, GE Healthcare and Microsoft launched the JV company. Snippets of news below

GE, Microsoft to Launch Joint Venture Aimed at Global Healthcare System Transformation
50/50 JV combines Microsoft’s deep platform expertise with GE Healthcare’s experience in clinical and administrative workflow solutions.
The two parent companies bring complementary expertise to this new venture and will contribute intellectual property, including the following:
Microsoft Amalga, an enterprise health intelligence platform
Microsoft Vergence, an SSO & CMS
Microsoft expreSSO, an enterprise single sign-on solution
GE Healthcare eHealth, a Health Information Exchange
GE Healthcare Qualibria, a clinical knowledge application environment being developed in cooperation with Intermountain Healthcare (Salt Lake City, Utah) and Mayo Clinic Source

Personally, I am pleased to see this. It’s great to see the super fragmented market starting starting to consolidate. Ultimately, this is good news for patients.

This is a great example of convergence that sounds logical, that bring together a company that knows how to make products while another company that has access to market. The cross sell leverage of the 2 firms combined is enormous.

It wasn’t that long ago that Microsoft had sold off it’s Amalga HIS solution to Orion Health. This asset in the hands of Orion Health, is this a set-up for someone bigger to buy-out?

Who makes the next move? Oracle, SAP, epic, Allscript, Cerner, Orionhealth, CSC/iSoft, etc.

We probably need to see another few big moves and give it 5 – 7 years to see next generation of healthcare apps. Exciting times.

Callum Bir

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9 thoughts on “Microsoft and GE Healthcare JV Deal

  1. Don’t forget IBM and HP – they still seem to want to play in the Health space – but like most of the big guys, they don’t really “get” it….will be interesting to see how this plays out.
    cheers,
    Paul Fitzgerald

    • Paul,

      Good point and thanks for the reminder.

      IBM I think “get” it. IBM’s acquisition in Initiate was brilliant. I personally loved that move, a great way to own a key hook in all the major national EHR systems even when the likes of Oracle (Clinical Repository) and Orion (Portal) dominates.

      Speaking plays, what would the market look like with IBM+Orion Health? This could be a game-changer.

      HP…. no comments….

      Callum

      • IBM and Orion – hmmmm …you are right, it could be a game changer, but then IBM has never really stuck to the application space, especially in Healthcare – a bit like Microsoft – they get bored waiting for the returns to come in quick time – and as you know quick is not a word you would normally use in healthcare IT 🙂
        Do you think IBM is seriously considering Orion? They have certainly become a success story – must be something in the NZ water!
        cheers,
        Paul.
        btw, HP do seem to have lost there way a bit in this space, haven’t they?

      • Paul, love your comments because it helps me think on this. You right, IBM I don’t see as the traditional enterprise apps (eg, Oracle, SAP) player, but then again, with Oracle with it’s hardware play, they are probably more IBM then ever. Perhaps consolidation could play out in a few steps.

        Another hypothetical – how would CSC patch make more out what they have at hand with iSoft – perhaps OrionHealth which also has Microsoft’s Amalga HIS which I still remember H200? Perhaps a string of pearls based buys in terms of execution for it to become relevant “globally”.

        HP in Leo’s rein I thought had the possibility to pull through the likes of SAP, which then would give them a platform to meaningfully stringing together industry edge applications which I sense SAP by themselves don’t have the appetite. I am frankly haven’t been following Meg Whitman’s plays – maybe wait for the dust to settle.

        If I were buying anything in Europe would wait for the EURO to hit well below 1.20 (EUR/USD) with the equity market bottoming.

        However, I personally would like to see some consolidation in the US market, and then, step-2 for companies looking to become “international”.

        Suddenly my mind explodes at this point with all the future plays if that happened ….. but that’s perhaps for the next blog entry.

        Callum Bir

      • Hi Callum, I think CSC is struggling with iSOFT – and with the UK starting to move away (or already have) from the original NPfIT programme players, it’s hard to see how they will make money from the purchase – again a traditional SI trying to play in the application space. I won’t be at all surprised if they try to sell off iSOFT in the next year or two, and possibly even break it up and then sell it – perhaps like Siemens appears to be doing with some of its clinical apps (e.g. France Siemens healthcare going to InterSystems). Unfortunately, SAP doesn’t seem to be able to get traction with its applications outside of Europe – maybe the cost is just too high. I think in Asia there is a role for a low cost offering, probably cloud based. The developing countries just can’t afford the likes of Allscripts, Cerner et al (not sure the developed countries can either!). At the end of the day, countries like Vietnam, Indonesia etc, and probably even China, most likely don’t need all the bells and whistles, just a basic PAS and CIS to capture data, place orders and maybe prevent drug interactions and the like. Do they need all the analytics etc? Probably not at this stage.
        It seems we may see an interesting next couple of years in this market sector!
        cheers,
        Paul.

      • Affordability, in my personal view, has more to do with business scalability. For example, the software licensing cost of commercial enterprise apps in the emerging markets is often at a point of market affordability, therefore, it comes down to whether or not the supplier can do this while making a profit, and therefore, it comes down to scale (business). As for the services fee, both business scale, but more importantly, if anyone become a global mainstream enterprise app, the supply pool of these technologies will increase substantially, lowering the overall services costs.

        So why is Cerner or the likes so expensive? Add up the COGS (Cost of Goods Sold), and imagine taking % of the annual revenue in R&D (which probably is a factor that means they can’t build their next generation of apps fast enough), scares resources that can work on their apps and the choices of their technologies, etc. Without looking at their recent SEC filings, I suspect they probably would make a loss if they have to sell it for US$50K to a hospital in Indonesia. I suspect the COGS will be higher than license fees (that’s 5 business-class trips) and there’s probably no way it could be implemented for another US$50K even using local resources.

        In other articles I had written, I am of the view that if we had a player that had business scale both their technology and market would help significantly lower the costs and help drive adoption of what could become pervasive apps.

        Callum

      • I agree entirely about the cost being unsustainable for the big guys – but then I believe that there model is wrong for the “low cost” markets, especially in Asia. The problem with Cerner et al, is that they have wonderfully deep applications which can do so much, but because of this, it is really hard to implement – just look at the UK, New South Wales and Victoria. It can be done with good functionality and on a wide/large scale, but you have to take away a lot of the choice in what and how you implement. Epic seems to have this model – any colour you like as long as its black….the Hong Kong Hospital Authority has done it, but they didn’t go to the clinicians with a blank whiteboard and ask them what they want – they built it and then said if you want to work here, then this is how you will work – they then set up a process for adding and improving functionality. There are some hospitals in the US that have similar rules. As I said earlier, I think a cloud model would work, but most of the big players are not geared for that type of payment plan, mostly due to the reasons you outlined above.
        cheers,
        Paul.

      • Cloud – yes, totally agree… Also, point on payment model ….

        Vendors may not as a business understand cloud, but, I am increasingly findings from doing consulting projects with telcos, where I see some really smart partnerships as part of the ecosystem play, at least in Asia.

        Why?
        1. they have a business model to their DNA is that’s long-haul, recurring revenue, with long-history of knowing how to bill / collect monthly.
        2. while they may not yet understand HIT well enough, everyone I know is dabbling into it at various levels of maturity and early success.
        3. many health systems is still deep roots in government based, so are telcos

        And yes, also agree, that the vendor technologies aren’t necessarily engineered down to its core to be SaaS enabled. Some struggle to spell this but … this is a key issue.

        HKHA model somehow seems to always defy reality of other countries in Asia and achieve things in HIT that has worked incredibly well for them 🙂

        Callum

      • Yep, agree – the telcos know that they need to play in this space, but like the IBMs etc they are just not quite sure how to do it. HKHA is certainly a beast of it own! nothing like a dictatorship to make things happen! 🙂

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