Economy 9 October 2023, 10:00am

The healthcare sector is facing a transformation - Interview with GE HealthCare's CEO

Csiki Gergely

There is still considerable mistrust in the use of artificial intelligence, and we are working to change this. Without the responsible use of AI, we will not achieve the necessary milestones that the transformation of healthcare will bring," said Jutas Szvilen Földvári, CEO of GE HealthCare Central and Eastern Europe, in an interview with Portfolio, who also spoke about the benefits of the separation from the perspective of the international group. We also talked to him about how the transformation will affect the Hungarian company, which is one of the strategic centres of the global group.

What were GE’s intentions when it was decided to spin off the HealthCare business into a separate company?

At GE HealthCare, we have been waiting for the spin-off for some time. By the beginning of the year 2023, the time was ripe for this to happen, obviously after a long preparatory work.

The goal was to leave behind the conglomerate structure, to better position GE HealthCare to advance its mission of precision care.

There are very few companies left in the world that operate in a way connecting several industries.

Is the aspect of economies of scale no longer dominant?

By creating three industry-leading, global public companies, each entity can benefit from greater focus, tailored capital allocation, and strategic flexibility

to drive long-term growth and value for customers, investors, and employees Recognizing this, GE decided to restructure the company into three separate industries with the goal of each becoming a leading market player in its own industry: GE HealthCare in the medical technology space, GE Vernova in energy solutions, and GE Aerospace in the aviation business.

How can first feedback be evaluated? What is the standard?

The international financial markets have reacted very positively so far to this transformation. In my opinion, this is a case where three separated businesses put back together become not three, but four. Shares of both the parent company and GE HealthCare have achieved significant gains. Both the investor community and the markets have positively evaluated this move. From the HealthCare point of view, we see that being an independent company allows us from an investor perspective, to attract a dedicated group of investors interested in long-term growth in healthcare.

We can allocate capital independently, we can operate independently both from the dividends perspective as well as from an R&D point of view,

regardless of how other GE companies perform in the given industry environment.

Can we state that the time has come for specialization in the world?

On one hand, industry focus is more important. On the other hand, economies of scale must be reinterpreted. As a result of the ceased conglomerate structure, three global companies were created, but with this, global economies of scale remain within the given industry. Various service functions, e.g., HR or finance, still offer synergy opportunities at the conglomerate level, but we find it more important that our company is responsive, agile, and operates with an independent mindset, regardless of what other brand partners do.

How did the ownership structure of GE HealthCare change after the spin-off?

In the first round, 80 percent of GEHC's shares were offered to existing GE shareholders. GE retained close to a 20 percent ownership share, which was then reduced to 13.5 percent, with institutional investors, investment funds interested in healthcare, and hedge funds increasingly involved. Obviously, this was generated by the strategic focus and the growth potential.

Healthcare is a complex industry that experiences ever-increasing demand.

With aging societies worldwide and the rise of the middle class in the East and Afrika, the demand for accessible and efficient healthcare is constantly growing. One of our strategic aims is a leading position in growing markets. Our activities focus on enabling precision medicine, the horizontal integration of various diseases, and we see huge opportunities in digitalization. Alongside these strategic goals, we aim to be a leader of the upcoming healthcare transformations.

How did this transition take place at the Hungarian subsidiary?

The Hungarian entity was prepared for this change, and all went smoothly. Regarding the role of the Hungarian company, it is important to emphasize that

Hungary has the second-largest unit in Europe in terms of the number of employees, and it is one of the seven global strategic sites.

Our close to 800 employees work as part of more than 20 organizations in functions supporting global, regional, or local markets. Our digital teams are the largest in terms of employee numbers, who are highly qualified engineers and software developers working on global products and solutions, such as artificial intelligence-based solutions, data interpretation and utilization, as well as other clinical imaging areas.

Is there a target for GE HealthCare, e.g., in terms of market shares?

Collaborating closely with diverse stakeholders of the healthcare sector, we are going to achieve sustainable and long-term growth, of which the significant increase in R&D investments plays an important role. Our Hungarian site has also been a part of R&D investments for the past 20 years since GE HealthCare has been present in Hungary. It is a serious challenge that

from the beginning of this year we have reorganized our operations in the region and have commercially united five countries: the Czech Republic, Slovakia, Croatia, Slovenia, and Hungary.

This new unit is the Central and Eastern European region, that is led from Hungary. We want to share the experience we have gained from our activities in Hungary and turn them into commercial successes in neighbouring countries. These are EU countries with very similar healthcare development dynamics and challenges. Unfortunately, these five countries are included in several negative statistical indicators if we take the fields of cardiology and oncology into consideration. It is also clear that all countries are struggling with a shortage of health workers. Also, for this issue we offer solutions that are beneficial for the patients and the workload of the healthcare professionals.

Are there plans to further increase the number of employees in the Hungarian unit? Is there still any free labour at all?

It is a good question to ask where we stand in terms of attracting available talent. First of all, we rely on talented professionals from Hungary, and then from neighbouring countries,

but experts also come to us from far outside the borders of the country.

High-value-added activities take place in our centers, whether we look at software development or financial, or other areas. There is clearly a strong competition among employers for skilled and professional specialists. It was not by chance that Hungary was chosen by many other large companies that play an important role in the AI field. We compete with them, and in parallel, we want to build and deepen existing relationships with universities in order to start specific training courses related to medical technology, including IT, thereby expanding our own talent pipeline and retaining talent that generates value locally, in the country.

Who are the local and global competitors in this field?

Just to name few Siemens, Philips, or emerging manufacturers from the Far East.

Who should be feared more, now rather the Asians?

We have seen market players from the Far East come and go, and some stay. We believe that a healthy and transparent competition is beneficial for the healthcare system in the country. It ensures both technological progress and better quality of healthcare services and products. This is in the interest of all of us.

Not so long ago, the global GE HealthCare conducted an international study called “Reimagine Better Health” among clinicians and patients. What was the purpose of this?

As an independent company, we set the goal of building a world where healthcare has no limits. For example, I chose this industry to build my career because it is close to people - we work with people - for people, and our technologies improve the lives of many people. Our survey was designed to hear from those people who are most involved and affected by the healthcare industry: patients and healthcare professionals. It was very interesting to see them thinking alike: they stated that healthcare should be more human and flexible. We interviewed approximately 5,500 patients, involved patient advocate organizations, and contacted more than 2,000 healthcare workers on several continents. In Europe, UK and Germany participated, and we also conducted an additional 24 more in-depth interviews. The survey participants did not know who was asking them and why. We intended to make sure that the group of respondents was diverse, both socially and in terms of the structure of the health sector, to get a global picture. Healthcare is on the verge of transformation.

Healthcare demand is increasing, while globally, according to a WHO study, approximately 10 million healthcare workers will be missing in the system.

On the other side, 1 in 6 people will be older than 60 by 2030. Meanwhile, digitization and AI also affect this industry, which has its opportunities and risks. A significant part of those interviewed believe that this can improve healthcare both in terms of efficiency and results. At the same time, more than half of the respondents are also worried about the dangers that AI poses.

The attitude towards digitization is currently rather ambivalent.

As one of the leading industry representatives we are eager to start a dialogue with relevant stakeholders how can we cope with these challenges and create healthcare that is more human and flexible.

It can already be seen that the implementation of digital solutions is a kind of forced direction, as there simply won’t be enough labour resources.

Absolutely. According to another study, healthcare workers spend only 27 percent of their time with patients; the rest is spent on administration or other work processes that do not necessarily improve the health of the patient.

So, there is enormous potential in automation, digitization, and the responsible use of AI.

Healthcare workers and systems are overloaded, and the two years of Covid-19 were a very significant stress test for healthcare systems in many countries. Many of them have drawn the right conclusions and are trying to address these identified deficiencies or system difficulties with appropriate transformation or, where appropriate, increased resources. In terms of effectiveness, new technologies will also be critical success factor.

Will AI spread in this area as well, or has it already been adopted?

Healthcare is a highly regulated industry. AI technology is still a relatively new field, and many challenges need to be addressed before it can be widely adopted in healthcare settings. However, the potential benefits of AI-based solutions, such as improved patient care outcomes and reduced costs, make it worthwhile for researchers, clinicians, and policymakers to work together to overcome these barriers to implement AI more effectively.

According to another study, 97 percent of health data is not used by institutions. This is a huge, untapped opportunity. In some areas, we already broadly use AI, algorithms based on machine learning, in medical image processing. We have software solutions that speed up image processing, thereby generating higher image quality and enabling shorter examination times.

A good example of such is an AI-based pneumothorax detection algorithm, which was developed by our data science team in Hungary and was GE HealthCare's first artificial intelligence-driven algorithm that runs on the imaging device and was approved by the US Food and Drug Administration (FDA). Pneumothorax is a life-threatening condition where there is air between the lungs and the chest, which can cause one or both lungs to collapse. Currently, the diagnosis of pneumothorax involves a physical examination by a physician, which is time-consuming and challenging.

However, artificial intelligence (AI)-based algorithms can automate this process to improve accuracy and efficiency. These AI models can be used to predict the presence or absence of pneumothorax in new chest X-rays, helping doctors make a more accurate diagnosis and save time. Similarly, with the help of artificial intelligence-based technology that detects the endotracheal tube, doctors can receive accurate data within seconds about the proper positioning of the tube led into the trachea, even at the patient's bedside, which was also developed by our Hungarian specialists. As we examine more and more patient data longitudinally,

the patients' data and life paths become more valuable.

This is in line with our focus on patient care pathways, where, for example, we seek to assess cardiology and oncology patients alongside clinicians during their therapy, collecting imaging, laboratory, and genetic information about them, comparing data to global rules for clinical decision-making. Such data can also be used to develop personalized therapies with greater precision.

Are these also predictive developments?

Yes, we are talking about predictive and decision-supporting developments where algorithms exist to detect anomalies in patient data, or guidelines for appropriate protocols of cardiology societies that are available digitally. Currently, doctors still have to rely on their expertise to make decisions even when the software suggests the next intervention or technique, but it is crucial to emphasize that medical professionals cannot be completely replaced by such systems.

There is still cautious attitude towards AI, which we are trying to change.

Our HelloAI program has been running for almost five years, one of the goals of which was to build trust and reduce biases related to the medical use of AI. We had more than 2,800 students who, by choosing from online courses, were able to familiarize themselves with the global trends that affect both healthcare and AI, as well as its utilization.

This effort must be continued because, without the responsible use of AI, we will not be able to overcome the challenges that the transformation of the healthcare industry will present to us.

How should we imagine a collaboration when GE HealthCare enters into the life of an institution?

Our cooperative relationships are multifaceted. Our teams collaborate with more than 140 outstanding academic and clinical partners in Hungary and throughout Europe, as well as globally in the field of faster and more efficient diagnostic, treatment, and patient care solutions. From a commercial point of view, a significant element of our product portfolio is hardware. Additionally, software solutions, which can be independent or connected to hardware, are playing an increasing role.

We strive to create solutions and collaborations with various healthcare institutions, whether at the private or state level, that are mutually and financially beneficial for both parties. Such collaborations can include various screening programs that we run in certain countries, and the related product sales.

For many customers, whether national, public, or private, we become the technology partner, with commitments extending up to 5-10 years. Therefore, GE HealthCare provides the latest technologies, whether hardware or software, for 5-10 years, enabling the given institution to achieve its healthcare goals, whether clinical or economic. With private service providers, the situation is clear; there is a very significant financial expectation on the part of the service provider that the solution purchased, whether software or hardware, should have the appropriate return on investment.

We are fortunate that globally and even regionally, GE HealthCare thrives in the private healthcare sector, where a good price/value ratio and a partnership pay off in the long term, leading to recurring partnerships.

For example, we recently put into operation a new Omni Legend PET device at a private service provider in Hungary, which is the second of its kind in Eastern Europe.

This year, it was chosen as the best radiology product in Europe, representing a breakthrough technology that reduces examination time by almost half. In PET examinations, we examine the patient by injecting radioactive isotopes, which has a significant cost. If it can be done with fewer isotopes and faster, it benefits the patient, the operator, and ultimately the financier.