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GE Unveils $6 Billion Health-Unit Plan

General Electric Co. launched its "Healthymagination" initiative Thursday in hopes of building a thematic presence in health care on par with its four-year-old "Ecomagination" campaign around environmental concerns. "Health care needs new solutions," said Jeff Immelt, GE's chairman and chief executive. "We must innovate with smarter processes and technologies that help doctors and hospitals deliver better health care to more people at a lower cost."

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GE said it will allocate $6 billion over the next six years for the effort, including $3 billion toward developing products it claims will lower costs, increase access and improve health-care quality. That is more than double the $1.2 billion GE said it had planned to spend on health-care research and development over the period.

GE said its health-care-finance group will boost lending by $2 billion, or 10%, to $22 billion to prod hospitals to improve information technology, especially in rural areas. The remaining $1 billion will be spent on partnerships with Intel Corp. and others, efforts to provide clean water and marketing.

The conglomerate disclosed the initiative in Washington, where the administration of President Barack Obama has been promoting heavier use of health-care information technology and advocating additional spending on public-health challenges such as malaria, tuberculosis and HIV-AIDS.

Mr. Immelt said GE´s health-care goals line up with the administration´s but said executives at the Fairfield, Conn., company have been considering the project for several years. "This entire program isn´t dependent on the stimulus," said Mr. Immelt.

GE said it would put the "Healthymagination" brand on as many as 100 products by 2015, from hand-held ultrasound scanners to CAT scanners and infant-care products sold to emerging markets through microfinance organizations. To qualify, GE said a product would have to improve access and quality and reduce cost, each by at least 15%. GE said it had hired U.K. advisory firm Oxford Analytica to assess products against those standards.

In part, the campaign is an effort by GE to reorient its health-care unit, which now derives the majority of its $18 billion in annual revenue from selling diagnostic equipment. Growth prospects for such sales have dimmed as public and private insurers have tried to curb costs. Mr. Immelt also hopes it puts GE at the center of the U.S. and global health-care debates.

Mr. Immelt predicted the new approach would help GE´s health-care unit grow at least twice as fast as the broader economy. "We don´t run a charity at GE," said Mr. Immelt. "We make money."

In another part of the plan, GE will aim to slow growth of health-care spending for its 300,000 employees below the rate of inflation by focusing more on prevention, which often is cheaper than treatment. GE said it is converting 175 company-run health centers into "wellness clinics."

One investor said he found the "Healthymagination" brand slightly awkward. "It´s highlighting another piece of what GE does," said Jason Small, a portfolio manager at Chartwell Investment Partners that owns GE shares. "But it seems a little awkwardly phrased."

[Estimated timeframe:Q3 2009-onward]

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Source: WSJ.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=3997



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