Every year after Thanksgiving, tens of thousands of doctors, hospital managers, equipment manufacturers and other medical industry professionals descend on Chicago for what might be the largest healthcare gathering in the world — the annual meeting of the Radiological Society of North America (RSNA). This year, however, was different as the action took place online for the first time in its 106 years. Still, that didn’t stop participants from attending virtual sessions to discuss breakthroughs in medical imaging, the promise of artificial intelligence (AI), and, of course, COVID-19 and its impact on the industry.
Among them was Kieran Murphy, CEO of GE Healthcare, a $17 billion business and perennially one of the largest names at RSNA. Murphy sat down — also virtually — with Steve Winoker, vice president of investor relations at GE, to discuss the pandemic, its impact on healthcare, and how COVID-19 is forcing the industry to innovate. This pressure may actually help bring the future of healthcare faster. Here’s an edited excerpt of their conversation. You can watch the full video here.
Steve Winoker: I don't think any of us could have predicted what 2020 was going to become. What has it been like to lead GE Healthcare through the pandemic?
Kieran Murphy: Can I say it feels like it's been a long year? I think since March we've been flat out, frankly, trying to manufacture all of the things that were required for COVID-19. It started in China, and then made its way through Europe and the U.S. Of course, we had to follow that trend and we started innovating in China, we diverted a lot of product to China, and that's where we invented products like CT in a box, which was a great innovation designed to separate the technology operator from the patient for safety reasons. It was fantastic and it just provided instant capacity in the hospital parking lot. And we've done that now across the world. We also did a lot of things to try and run the business better to make sure that we met our commitments for investors. And we just were sensible in conserving cash and our resources, and keeping our employees safe, of course, which was critical in this environment.
SW: How is COVID-19 impacting the future of healthcare? Are there any trends that we're seeing that are here to stay?
KM: I've done a lot of panels as we've gone through the year. Most of them are about telehealth and how radiologists and how physicians generally had to adapt so quickly to telehealth. And one of the hospital groups’ CEOs commented, we've made eight years of progress here in two months. That just shows the adaptability of the system. As I said at the time, necessity is the mother of invention. We had to ensure that we rolled out AI that was useful in this environment and other digital tools that were useful. Of course, we had to ensure that we had 9,000 field engineers, for example, mobilized around the world so that we could keep hospitals up and running, as well as continue to deliver quality and uptime along with all the parts that they require. So, I'm really very proud of the team, in terms of the way people went to work every day and behaved extremely sensibly and safely so that we kept the machine running quite successfully. And we've had a pretty good year on the back of that.
SW: A number of investors have said to me, ‘Isn't this just a question of trends that were already ongoing? The pandemic just has accelerated that.’ I mean, do you see it that way?
KM: I do, but I also think it brought some innovations to the fore. I think about the technologies that we deploy to improve workflow in this environment. Workflow became so important because you wanted to minimize that time with the patient and absolutely maximize the time that caregivers had to pay attention to clinical care as opposed to managing administration and workflow. That's the theme that we were running this year at RSNA, this concept of being intelligently efficient, which is looking to how can we take the drudgery out of this? How can we smooth workflows and bring advanced technology and analytics to the space so that we can make better clinical decisions and speed up the pace of diagnosis, which, of course, is critical in this environment?
SW: Using innovation to increase productivity and efficiency seems like a critical part of healthcare in the future.
KM: We generally regard this as a multitrillion-dollar waste problem. But because of our scale, the amount of medical equipment we have installed around the world, and the breadth of our offerings, we’re really tackling that waste problem. That’s why I like to talk about us being at the center of an ecosystem striving for precision because that really drives us. It is better critical care, but it has to be with more capacity and better productivity.
SW: Could you tell us about some of the new product innovations you're announcing this week at RSNA and how can they help solve some of these problems?
KM: Two years ago, we introduced our Edison AI platform. We’ve been using it to develop an ecosystem where we can deploy new applications either on the medical devices themselves — at the “edge” — and in the cloud. Some of the things that stand out here are quite extraordinary. AIR Recon DL, for example, is our first deep learning, MR image reconstruction technology cleared by the Food and Drug Administration. That means that you get a much better MRI with shorter scan time. Imagine the productivity it can deliver. It's a game changer. Revolution Apex, our latest computed tomography (CT) technology, is also enabled by deep learning image reconstruction algorithms generating TrueFidelity CT images. And on the ultrasound business, we are really quite excited. We've launched a new product into our women's health ultrasound — where we are a market leader — and applied AI, which again can reduce cycle time by up to 45%. You see a theme here: better quality diagnosis in less time, improved workflow, better productivity. And that gets at some of the deepest problems in healthcare, which is cost and efficiency.
Last year, we also introduced our Critical Care Suite, which uses AI for identifying and prioritizing cases where a collapsed lung is suspected. We have updated it at this time to detect and localize an endotracheal tube. It locates the endotracheal tube tip and carina with automated calculation of the vertical distance between the endotracheal tube tip and carina, which can be critical for the most serious COVID-19 patients. We can continue to build these applications, put them on the platform and distribute them globally.
SW: You recently announced the acquisition of Prismatic Sensors. That's the first acquisition for both GE Healthcare and GE in a long time. They're a leader in Deep Silicon detector technology using photon counting to improve CT imaging. Is this big news for the industry and GE?
KM: It's big news for us and it's big news for the industry. This is a potential game changer in terms of being able to do high-quality CT scanning and being able to see things that we wouldn't have seen before in scans. The technology has to go through more clinical trials, but it's like the medical imaging equivalent of moving from black and white TV to high-definition color.
I think Prismatic is a great example of the way I love to do deals. If I think about my last 10 years in GE, we bought into a lot of businesses at an early stage, we increased our stake, we proved the technology, and then we bought the business. I like that way of investing. It's lower risk and can bring exciting technology into the business.
SW: Let’s shift gears to the financials. There's been some lift from COVID-19 demand in parts of the portfolio. But it's pressures elsewhere. How does 2020 look, and then 2021 and beyond?
KM: Look, you're absolutely right. We did get some COVID-related demand this year from ventilators, monitors, CT and X-ray. But of course, there was pressure on all of the business that related to elective procedures. As we get to the end of 2020, I think we'll close out a strong year here. I think we're in a situation where we enter 2021 with quite a strong backlog. I see the market stabilizing. But I also have to order a little bit of caution because the pandemic is not yet over. I think we have to be somewhat guarded in the way we think about market growth.
SW: We're certainly seeing recent global outbreaks that are quite significant in Europe, and now in the U.S. They may drive some impact. How are you dealing with that possibility?
KM: I would say, overall, we're seeing a return to somewhat more stable markets. Hospitals, don't forget, are getting more and more resilient in terms of the way they're setting up capacity to eat into the pent-up demand in oncology and cardiology, for example. We are seeing a strengthening financial position in a lot of the healthcare systems. So, I would say we have a good underpinning for maintaining our general view in the market that this is low-to-mid single-digit growth, a softer market. And I think about the spread of our product range, we have a strong service business. That provides a lot of stability and flow. Naturally, we delivered some extraordinary volumes of things like ventilators last year, which won't repeat. But, as I said before, we see diagnostics and ultrasound recovering quite nicely. And those are all better margin businesses.
SW: How do you think about the trade-off between revenue growth and margin expansion?
KM: We need to be able to do both of these things. We have a big initiative to expand our lean management and our lean processes across the business. We've demonstrated in 2020 that we are able to go after waste in the business. We're able to get out more cash, get out more cost by applying these lean techniques. We have many examples from factories and offices around the business where we have managed to do more with less to improve processes.
I'm also excited about what we're doing in platforming, especially in the environment we're in now, where we're trying to bring a platform of analytics. When we can have a common hardware platform and an easy way of deploying software on that platform, this makes for a much more compelling investment situation.
SW: Can you think of a recent lean experience to make the technique a little bit more real?
KM: Let me tell you about what we did at our factory in Florence, South Carolina. Last year, all of us as a management team, spent a week working on lean techniques with the team on the ground there. It was quite extraordinary this year to see how that translated into less inventory across the system and better cash flow, among other things. I think that's the essence of what we're seeing when we apply these techniques and we get everybody involved as a team on the ground. It actually delivers a great result.
SW: One of the questions that people ask me is about our level of investment in Healthcare. What would you say?
KM: Look at the new products we're rolling off at RSNA. We are investing heavily in digital, which is what we see as being the future of healthcare. And I think if you look at the scale of the teams we deployed across the world this year to answer the call on COVID, not many companies can respond like that. And we have the capacity to invest, as you have seen with our investment in Prismatic Sensors. And as I said before, we were able to license products for our pharmaceutical diagnostic business, complete those developments and get those products on the market. I think we're well positioned.
SW: To close out, how would you summarize why you believe Healthcare is positioned to win with customers and for shareholders?
KM: We are a business with an unrivaled scale. We have an amazing install base in 142 countries across the world with 9,000 service engineers out there servicing customers. I think we've shown 2020 that when we want to do something, we can do it. And we have an awesome team.
Again, I would say this year has just shown the depth and the quality of the people we have. If you look at the AI, machine learning and deep learning that we are applying to technologies now at the cutting edge of the market, it's extremely exciting that we're in a position to be able to do that. So, we look ahead with great people, we have great technology, we have big scale.
And I think if you look at our framework for investors, we're going to continue to win in a market here that has solid growth prospects for the future. We continue to improve margins and cash flow, and we have many ways in which we can improve our business. So, I'm quite excited about the future.