Breaking up is a good thing-healthcare blog


Author: Kim Belard

General Electric Announce It is dividing itself. GE is a symbol of the United States and has been part of the US industrial pattern for the past 129 years. However, 21Yingshi Century is not friendly to it. The breakup was not entirely unexpected. Then later this week, another long-time American idol Johnson & Johnson, Also announced It will split on its own, and I think, well, this is interesting.Toshiba Said It is splitting up, and I thought, well, I might have to write this down.

Healthcare is still in the integration stage, but some lessons may be learned from it.

For most of its existence, General Electric has been an acquirer, devouring the company, believing that its bragging management structure can provide value to any industry. This is most famous in the Jack Welch era, but since then, it has been gradually shrinking its scale, spinning off some of the more problematic sectors, such as electrical appliances, locomotives, and most of the once-large financial services business. It will spin off its healthcare business in early 2023 and spin off its renewable energy and power business in early 2024; its aviation business will retain the General Electric name.

“Healthcare investors want to invest in healthcare,” CEO Larry Culp (Larry Culp) explain“We know that we have shortcomings in each of these three areas, partly because of our structure.”

Mr. Culp Tell Wall Street Journal, “This is not necessarily the time to make ambitious plans. We need to clean up the balance sheet and return to the basics in operation.” Scott Davis, CEO Better research, Not so good, Tell New York Times: “GE was caught in the past-it’s over now, everything is over.” In Washington post, Dan Ives Wedbush Securities Call it “the symbol of this new digital world.”

Johnson & Johnson faces different challenges: selling medicines and medical devices is just a lot of It is more profitable than selling band-aids and Tylenol. To reflect this, it is splitting into one company to sell the first two types of products, while a consumer products company is responsible for selling the remaining products. The former company will retain the name of Johnson & Johnson.

“Doctors and hospitals only want hips and knees, and cheap and effective drugs. They didn’t really think of band-aids,” investor/analyst Les Funtleyder Tell New York Times.

Toshiba’s story may be a little different.It has been processing from a Major accounting scandal For several years, some Failed takeover offer, And (individually) expelled it Chief Executive Officer And its ChairmanIt is divesting its energy and infrastructure divisions and its equipment and storage businesses, and will retain the Toshiba name because it holds a 40% stake in its flash memory company Kioxia. Finished in 2018, And some other assets.???

Toshiba’s spin-off is considered the first such spin-off by a Japanese company.Toshiba is often compared to General Electric, even older than General Electric, but CEO Tsunagawa Satoshi Now stresses: “We are no longer an industrial group. Our strengths are in infrastructure, energy and semiconductors. Restructuring is an evolution for the future.”

Although each of their stories is unique, what each breakup has in common is the hope that investors will see greater value. It has nothing to do with the product or the customer; it is about return.

Healthcare knows this.

Healthcare has always been a hotbed of acquisition and integration. Hospitals buy hospitals; health insurance companies buy health insurance companies, pharmaceutical companies buy pharmaceutical companies, digital health companies buy digital health companies, and private equity companies buy doctors.But we also saw things like CVS Buy antai UnitedHealth Group Acquired DaVita Medical Group (with Try to buy Change Healthcare).

This is not really for the benefit of “us”.I mean, does anyone really think Their pharmacy or health insurance experience Will it get better since CVS took over Aetna?Who can really explain everything The best thing now what?Yes Growing pharmaceutical companies Will it really produce more innovation or lower drug prices?

Nevertheless, when I see the disintegration of conglomerates like General Electric, Johnson & Johnson or Toshiba, what I think of is not those medical groups, but hospitals.

The hospital system is huge.For-profit chains like HCA may not be surprising Annual income $59b, But the “non-profit” UPMC may have Annual income $23b. Mayo Clinic with chlorineThe Ifran Clinic also reported double-digit billion-dollar revenue. We are talking about big companies.

But besides the healthcare group, is there anything else in the hospital? They repair your heart here, implant a new hip joint there, they deliver your child, they attack your various cancers in various ways, they place various endoscopes in your body, and they take a detailed picture of you Like, and God knows, they will conduct various laboratory tests and measure you at the same time to ensure that they can charge you within the allowed range.

I can see the argument that whether you are undergoing bypass surgery or having a baby, imaging and laboratory tests are required, but it is not clear whether performing bypass surgery can make the hospital a better place for delivery. To be the best cancer hospital, or even just an excellent cancer hospital, does not mean that it is good at cholecystectomy. Service lines are businesses; ensuring quality within a service line is hard enough, let alone spanning them. More is not necessarily better.

Michael Farr, person in charge Fall, Miller and Washington, Tell Baby treasure: “More efficient CEOs say,’Wait a minute, I need to make sure this is strategically and logically integrated with everything we do in our core business.'” He was talking about the divestiture of GE, but how many hospital CEOs are accepting The same examination? In addition to providing tedious “patient care”, how many of them can truly define their “core business”? Which patients, which care, and where and which services are used?

Hospitals increasingly want to provide all services to all patients in all places, just as industrial groups want to provide services to all customers in all industries. This worked well for a long time, but it no longer works. At that time, it also came in the field of healthcare. Hospitals and all healthcare companies need to truly define and focus on their core business.

There are too many corporate groups in healthcare. It’s time for them to break up.

Kim was the former head of e-marketing of the main Blues project and the late editor Tincture, Is now a regular THCB contributor.



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