As the White House and Congress debate how to contain runaway medical costs, equipment maker GE is embarking on its own 
quest to help hospitals reduce wasteful spending and treatment errors. As much as $500 billion out of the $2.2 trillion spent on health care is wasted on duplicate processes, bad coordination, and out-of-date scheduling, says GE, in the latest Businessweek (April 18-24, 2011). “It’s generally accepted that for every $100 spent on health care, $20 or more is waste”, adds the CEO of GE’s health-care/IT unit.
GE’s plan takes two approaches. The first is to cut costs of medical imaging, with 80 new products coming on-line in the next 2 years, including an MRI that scans only extremities. This frees up whole-body machines for more complex scans, which both cuts a hospital’s costs and raises its revenues.
Although improving molecular imaging , which helps catch diseases earlier, is the most glamorous way to save money, the US health-care overhaul is also looking at a second source. For GE, that means branching into information technology and consulting. The 2010 law signed by Obama requires hospitals to use more IT to reduce costs and medical errors. As a result, hospitals are looking for outside expertise. GE Healthcare plans to do $1 billion annually with its new consulting unit, analyzing patient data and digitizing medical records.
OM is again at the center of these changes, leading the way with new technology (Ch.7), process improvements, and quality tools. Many profs have asked us to keep an eye out for health-related examples such as this one.
Discussion questions:
1.Why are so many expensive devices used in hospitals?
2. How can OM help make hospitals more efficient?
3. How can medical records increase the quality of healthcare?