Tomorrow’s Technology Gets the Put-Off : Health care: GE’s new scanners run into spending restraints.
At GE Medical Systems’ campus here, doctors and scientists from as far away as China, Japan and Great Britain come to see the making of a remarkable medical innovation-- magnetic resonance imaging machines.
The bulky MRI scanners are produced in a large, squeaky-clean factory on the Wisconsin prairie. Engineers recruited from GE’s aerospace division, marketing veterans from the home appliance business, and medical doctors all contribute their particular scientific or business savvy.
But while GE has been leader both in market share and in many technical advances, it is now slugging it out with five other manufacturers in an increasingly saturated market. GE and its competitors are finding the times are changing for the medical equipment manufacturer.
These manufacturers are finding themselves the targets of critics who blame the nation’s skyrocketing medical bills on the proliferation of big-ticket, high-tech products, like GE’s $2-million MRI scanners.
Such pressures are part of the reason GE Medical, one of the country’s biggest medical manufacturers with annual sales of more than $3 billion, is likely to see sales slow to single-digit levels after more than five years of double-digit growth.
“1992 is going to be a real tough, tough year,” says company spokeswoman Phyllis Piano.
In addition to MRI scanners, GE Medical also makes computed tomography, or CT scanners, and X-ray machines, competing fiercely with international giants like Siemens of Germany, Philips of the Netherlands, and Toshiba of Japan.
John Trani, senior vice president and head of GE Medical, argues medical technology is being unfairly blamed for the explosion of health care costs. “Technology is a convenient whipping boy,” said Trani, former head of GE’s cellular phone division.
He noted that MRI and CT scanning account for only a small part of total health care costs: only 1.5% of the total U.S. health bill, according to the American College of Radiology. The real issue, Trani argues, is overuse by doctors.
“If you minimize the number of hammers you don’t minimize the carpenters,” he said.
The industry is beginning to look critically at overuse of the machines it makes as endangering their very future.
“We are facing a more hostile anti-technology attitude than ever before,” Raymond Gilmartin, chairman of the Health Industry Manufacturers Assn., recently said at the group’s annual meeting. “We need to do all we can to stop over-utilization . . . we must throw the full force of this industry behind the use of outcomes data and practice guidelines to stop overuse.”
Like others in his industry, Trani, whose company invests $250 million a year in research on medical equipment, argues that cutting back on technology will mean lower R&D; budgets and less innovation.
“The industry must show what technology does for people,” he said. “If we’re not careful we’ll take one of our most competitive industries with a $3-billion positive export balance and kill it.”
Manufacturers are focusing on creating more cost-effective machines, not just ones with more bells and whistles. MRI makers, for example, are showing hospitals how to increase “throughput”--the number of patients sent through the machine each day--in order to lower the cost of each scan.
And GE is investing in research following up on patients who use MRI in hopes it will show that by replacing other tests and shortening hospital stays, the technology saves money as well as lives.
As consumers as well as creators, GE Medical’s researchers, marketers and factory workers seem acutely aware of the cost--and value--of their products. Wesley Klages, head of MRI engineering, for example, can vouch for the CT scanners he helped develop: they were involved in the successful diagnosis and treatment of his 13-year-old son’s brain tumor.
But GE Medical researchers also know that technology can’t solve everything. Bobby Bowen, general manager of GE’S advanced technology division, jokes that what his researchers are aiming for is something like the powers of the doctor in Star Trek: “Bones McCoy--he waves a wand over the patients; it makes a noise and tells the problem and fixes it. Anything less than that is a comedown.”
But as he settles painfully into a chair, he says that the MRI he had done on his own back “wasn’t definitive,” and doctors haven’t been able to do anything for him yet.
The white-haired Bowen was in the medical business when MRI and CT machines were just science fiction. He worked on the team that developed GE’s CT scanners, which gave many doctors their first non-surgical glimpses of the structure of the brain.
Now, he is overseeing the development of a cutting-edge technology called positron emission tomography, or PET scanning, which shows the functioning, rather than the structure, of organs like the brain and heart. PET scans can show certain regions of the brain lighting up when a person looks at a flower--or even thinks of a flower.
But PET technology is in limbo as a clinical tool, in part because of increasing health care cost constraints. Few insurance companies will pay for it, calling it experimental.
That shows how times have changed. Back in the 1970’s, CTs spread like wildfire because Medicare and private insurers paid well for the procedure, despite fitful government attempts to limit the number of machines. MRI, which came on the scene in the early 1980’s after Medicare payments became more stringent, became available somewhat more slowly. Now, PET looks likely to become clinically available only in limited situations because of severe payment constraints.
The new, more cost-conscious environment doesn’t discourage S. Morry Blumenfeld, a senior research manager in clinical applications, who works with researchers. He notes that in the 1980’s medical business, “sometimes people who didn’t need to buy things did. Those days are gone.” But he’s convinced MRI’s uses will continue to grow. He’s excited about the possibility of surgery that uses MRI to guide a device to burn out tumors rather than cut them out. And he hopes MRI will become widely used to distinguish benign from malignant breast tumors without biopsies.
GE Medical Systems at a Glance Headquarters: Pewaukee, Wis.
Employees:
8,000 U.S.
7,000 in Europe and Asia
Products: X-ray equipment and high-tech imaging products, including MRI, CT, PET and ultrasound.
Sales: More than $3 billion
Earnings: Not disclosed.
