Georgia Hospital System Partners With Royal Philips

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Medical equipment manufacturers operate largely on a supply and demand model. But a new agreement between Georgia Regents Health System and Royal Philips means Philips will take on a new role. It will supply equipment and help the hospital achieve its mission of delivering better care to patients at a lower cost.

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Companies that make medical equipment operate largely on a supply-and-demand model. Hospitals buy their multimillion- dollar machines, use them for a few years, and then go shopping again. In some cases, manufacturers have designed entire medical systems within a hospital.

Now, in what appears to be a first-of-its-kind partnership in the United States, a tech giant - Royal Philips - and a hospital system in Georgia are sharing financial risk and reward. Jim Burress reports from WABE in Atlanta.

JIM BURRESS, BYLINE: Doctors just finished a heart procedure on a child, here in a radiology lab at Georgia Regents Medical Center in Augusta. Radiologic tech Scott Stevens is among a half-dozen folks prepping the room for the next patient.

SCOTT STEVENS: They've probably had an aneurism, in the past. And we've done some coiling, and we're going to make sure that things have gotten better.

BURRESS: All of this is happening in a huge, new suite with all kinds of diagnostic machinery, a monitor as big as a refrigerator, and even mood lighting. And they're all Philips products. It's the result of a just-signed, 15-year, $300 million agreement. Philips is now going to provide the entire Georgia Regents system with everything from equipment - like in this room - to maintenance, to training, potentially even light bulbs and toothbrushes.

But Philips also gets something it's never had before: complete access. Steve Laczynski is president of the Americas for Philips Health Care.

STEVE LACZYNSKI: We believe there's true value in understanding more of the workflow of the institution.

BURRESS: Under the partnership, about a dozen Philips employees will work in-house at Georgia Regents. They'll sit in meetings, offer ideas and develop systems based on one goal: improving patient outcomes. Philips sees opportunity in the new federal health care law. The law ties some hospital payments to keeping patients healthier. So if more patients get better in less time and at a lower cost, the hospital pays Philips a bonus.

That's what's in it for Philips. What's in it for Georgia Regents is one answer to a complex puzzle, says hospital CEO David Hefner.

DAVID HEFNER: Our problem is we have to deliver health care better, faster and less expensive. What I wanted was a vendor, or a manufacturer, that actually was that kind of partner that would stand in our shoes and think from our point of view, not just sell me more equipment.

BURRESS: If Philips is successful, it hopes to make this deal with other hospitals, says Steve Laczynski.

LACZYNSKI: I know you'll see more of these types of alliances form because it's where health care needs to go.

BURRESS: Because the concept behind the partnership is so new, both parties have asked regulators to weigh in on the deal. That should happen within the next 18 months.

For NPR News, I'm Jim Burress in Atlanta.

GREENE: And that story comes to us thanks to a partnership of NPR, WABE and Kaiser Health News.

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