In conversation with the head of Philips Healthcare

Steve Rusckowski, CEO of Philips Healthcare, and Walter van Kuijen, CEO, Philips Healthcare for Europe, Middle East and Africa, visited Dubai earlier this year. In an exclusive interview, Callan Emery, editor of Middle East Health, asked them about business in the region and the company’s future plans.

Callan Emery: How well is the Middle East region performing for Philips Healthcare?

Steve Rusckowski: The Middle East region is performing exceptionally well for Philips. We have very strong double digit growth both in terms of order intake as well as sales. In addition to very strong business turnover, we are also excited about the breadth of different businesses in which we also have a presence within the Middle East.

CE: …within the medical sector?
SR: Yes. Obviously we are very strong in imaging and we see a deep and rich presence in our other businesses – like our ultrasound business, our patient monitoring business, our defibrillation business, our information technology business. And this is particularly so in IT as we have a few new installations of our premier (Picture Archiving and Communication System) product, iSite (See page 42).

CE: Where are these being installed?
Walter van Kuijen: NMC [New Medical Centre in Abu Dhabi] has the first installation. It will be the first to go live.

CE: Are there other facilities outside of the Emirates where iSite will be installed?
WvK: Yes, we have numerous installations planned throughout the region. It is one of the stepping stones we see ourselves involved with. With these installations we are closing the loop in the care cycle [Philips Healthcare’s philosophy revolves around the paradigm of the healthcare cycle – which incorporates prevention and screening, diagnosis, treatment, monitoring and health management]. IT is one the ‘glues’ that makes it all happen as you have transparency of patient information in that cycle. These solutions are adding value to the treatment process.

CE: You said you are very strong in ultrasound in the region. For which of your other businesses are you finding strong demand in the region?
SR: As you know with Philips Healthcare, historically it had its roots in x-ray technologies. Over the past years we have added several new businesses to our portfolio. So we are now much more than an imaging business. Your classic imaging modalities are x-ray, MRI, CT and nuclear medicine, but beyond that there is a substantial piece of our product line that falls outside of imaging. Our big businesses are, as you mentioned, ultrasound – we’re the world leader in this field in all applications – cardiac, general imaging and woman’s health applications. We are also the worldwide leader in patient monitoring systems, which range from high-end monitors to simple spot check monitors for vital signs. Additionally, we are one of the leaders in cardiac care systems, like defibrillators that professionals use in the ambulance or hospital, but we are also the worldwide leader in Automatic External Defibrillators – this is one of our strongest businesses.

CE: You’re talking global business?
SR: Yes. For what we do globally we typically have a representative in each of our geographies and that’s true for the Middle East as well.

In 2007 we acquired seven companies, which broadens the line even further. The biggest acquisition, which we announced in December, was Respironics [for €3.6bn (US$5.2bn)]. This company will increase our presence in respiratory care products, specifically sleep disorder diagnoses and treatment that will be placed in the home. The company also offers a set of complementary products in the critical care business, such as non-invasive ventilation and some products for neonatal intensive care units. It’s a business which represents about US$1.3bn in turnover that is growing at strong double digits. As that becomes part of our business, Philips Healthcare is approaching a US$12bn business. About 40% will be in imaging systems, but the other 60% in many other businesses.

CE: Your acquisition of Respironics points to a movement towards home-based healthcare. Does Philips see this as an important part of future healthcare?
SR: We focus on three care cycles – one being cardiology, the second is oncology and the third is women’s health. Those are very broad fields so we have to narrow them down to specific medical conditions such as coronary artery disease and congestive heart failure. What we have explored is how you can demonstrate how innovation can improve quality of health outcomes as well as lower cost through the whole care cycle of diagnosis, treatment, planning and managing the patient. This has to happen independent of care location. It is impossible for us to improve these care cycles by just having a presence in the hospital, so over the past two years we have made substantial investments in the business of home healthcare for chronic disease management, with the initial acquisition of a company called Lifeline Systems [for US$750mn], which provides alert services for elderly people throughout the world. We added geographically to this with the acquisition of Healthwatch [for US$130mn]. We then acquired Raytel [for US$110mn] to deepen our presence in medical applications for the home. The company provides cardiac monitoring services in the home.

We see this as a good beginning, a good platform to build on. And with our strong presence in hospitals coupled with our strong presence in the home, we are in a position to provide real healthcare throughout the care cycle.

CE: Looking at the care cycle what is the way forward for Philips Healthcare? What areas of the care cycle does the company plan to develop over the next few years?
SR: Looking at a summarised version of our strategy starting with the patient through to the care provider, the focus must be applied in the hospital and the home and it has to be built on our underlying core competencies in technology and innovation. What are they? Clearly, imaging is part of the core competency that we bring to all these market places. Second is information technology, both for managing the data and for providing clinical support systems. Third is monitoring. This ranges from the very acute, premium monitoring systems to the more simple monitoring systems. Eventually this will lead to monitoring in the home. Fourth is related services – all this technology needs to be serviced.

And we are focusing on very selective therapies, such as the Ambient Experience [Philips Healthcare introduced the Ambient Experience last year. The company describes it as an “interactive, people focused healthcare environment that uses design and technology to create a more comfortable experience for patients and staff, improve workflow and increase operational effectiveness”]. We are not going to look at broad therapeutic opportunities. We are going to look at specialised therapeutic opportunities within each of the care cycles.

However, with all that we cannot do it on our own. We need to form alliances and partnerships. So going forward, anything we do will fit into that strategic theme and framework.

CE: Looking specifically at the Middle East, where are you finding demand. What area of your medical business is in demand here?
WvK: The thing that we have seen over the past four years and how we deal with the changes as a company is that it is not just about the equipment anymore. The investment power is available here and there is a gap to bridge with the Western healthcare systems, but there is also a clear desire to understand the difficulties that these healthcare systems are going through and to learn from that and transfer that knowledge into the healthcare systems here. That is also true of how we operate as a partner to the healthcare players in the region. So we have moved away from looking at just what the a ultrasound does or CT does, to people-centred focus. Last year we introduced the Ambient Experience and showed how a patient can take control of a procedure. But the user, the doctor, can now also take full control of the machine such as with voice control and other means which are being implemented. So we are moving away from a concentrated focus on technology, to a people-centred focus, although, of course, we will continue to introduce new technology.

In answer to your question, it really is a translation of needs into what we can offer as a company. And sometimes it translates into a product and sometimes it translates into a solution base.

CE: Most of this medical technology is expensive and really only accessible to the wealthier sector of society. In the healthcare sector what is Philips doing with regards to creating greater access to healthcare for the poor? What is it doing with regards poverty alleviation?
SR: There are roughly six billion people on this planet. And only about a billion people have access to this technology in healthcare. We believe there is great opportunity to help in the Developing World – in Africa, Latin America and portions of Asia. We are doing a number of things. One is that we are trying to lower the cost of some of these solutions, like some of the ultrasound machines, which are allowing us to apply this technology in more remote places. You’ll notice the introduction this year of smaller, lighter, easierto- use ultrasound devices. These devices can be used in more out-of-the-way places and, with their capabilities, provide screening to improve disease prevention, for example. Secondly, with remote information exchange, wireless capabilities, satellite links, we can do more telemedicine applications and we have several organisations around the world with doctors and nurses that are very interested in volunteering their capabilities. Information can be captured remotely and sent to a central location and they will do the diagnoses and treatment pro bono. So this is an area we are exploring. And thirdly, there is some opportunity here for the home monitoring capability that we discussed earlier for the Developed World. If we take some of the emerging countries around the world – such as China, for example – they are starting to see the same disease issues as the Developed World. This offers us an opportunity to do more home-based diagnoses, treatments and management in a very economical way. We are exploring these possibilities, too, as we expand our home-based healthcare business.

CE: These projects you say are being explored. Do you have any projects up and running? WvK: Yes. In South Africa, for example, we have set up a network of screening centres where all the diagnostics, such as chest screening for HIV [one of the first tests for this disease because of its co-morbidity with TB] can be done. We have set up 20 chest screening units throughout the rural areas. The information is transmitted to Johannesburg and the diagnoses are done there.

Actually, we have multiple projects ongoing in Africa, such as Tanzania and Ghana, where we are working with numerous hospitals and clinics. We have committed ourselves to be there for many years to contribute to the development of a sustainable healthcare system. We are involved in setting up the basic requirements in small clinics all the way up to central clinics where more high care healthcare can be delivered. It involves not just delivering the equipment, but also the civil works as well as training and maintaining for six or seven years the quality of the systems and the level of knowledge of the nurses and doctors.

 Date of upload: 3rd May 2008

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