Looking for Long-Term Partnerships – A New Imperative for Players in Healthcare

How Recent Challenges and Trends Are Changing Traditional Healthcare Delivery Models

Martin Lindner |  2017-04-05

On the occasion of the Healthcare Business International conference in London, Siemens Healthineers conducted a joint global survey among healthcare executives on pressing issues in the market. Sourabh Pagaria, Global Head of Enterprise Services & Solutions, talks about what he expects to be major topics and how relationships among players in the field will change in the next few years.

Management Summary

  • Challenge: Continuing competition for skilled staff, the digitalization of healthcare and the need to build new partnerships could shape the growing industry over the next few years.
  • Solution: Organizations are increasingly developing novel forms of cooperation looking at upstream and downstream processes in the healthcare chain to improve quality and optimize success. One evolving phenomenon is risk-sharing agreements between providers and suppliers.
  • Results: As a supplier, Siemens Healthineers has been engaging in several such innovative partnerships. Agreements covering managed equipment services for medical devices or responsibility for lab operations have led to win-win solutions and may redefine the cooperation between providers and suppliers.

Mr. Pagaria, for the second time in a row, Siemens Healthineers together with Healthcare Business International (HBI) conducted a global survey among healthcare executives. What insights do you expect?

Sourabh Pagaria: In general, the survey is a great platform for understanding how healthcare providers view their upcoming challenges in a highly dynamic industry and how strategies to meet these challenges are changing. These, of course, will also affect the role we are playing ourselves as a partner of our customers.

Fine-grained survey results are still undergoing analysis and will be presented at the HBI conference [see info box]. Can you give us some clues what the most pressing issues are?

Pagaria: On the one hand, there are topics that have always been hot. Take staffing, for instance. In a service sector like healthcare, there is great competition for talent. This may be especially true for private players with a strong drive for growth and ambitions for cross-border expansion. On the other hand, there are more recent trends, such as digitalization, which are disrupting the market. If you look at China, with a huge number of people using health apps and uploading their health data, for example, this pushes service providers to depart from traditional delivery models and to find new ways of engaging patients into the care journey. Establishing a brand among patients and improving quality as a provider are important strategies here. Indeed, through a greater focus on quality and performance, there is a strong movement towards partnerships and cooperation. Players in healthcare are exploring how to best work together within their ecosystems of suppliers and providers. This seems to be a new paradigm in healthcare.

“Digitalization pushes providers to depart from traditional delivery models and to find new ways of engaging patients into the care journey.” Sourabh Pagaria
Global Head of Enterprise Services & Solutions at Siemens Healthineers

Meaning thinking in value chains is becoming more important?

Pagaria: Value chain thinking may not be the best possible expression, but what we clearly see is that healthcare providers are increasingly moving from “sickcare” to healthcare. Right at the beginning of the patient journey, they ask what happens afterwards, and how they can cooperate with providers of outpatient or home care, for example. That is, today, organizations need to look at what happens upstream and downstream of their businesses to improve care and optimize success.

Do you see important differences between developed and emerging markets?

Pagaria: Definitely. In emerging markets, creating access to healthcare is often an issue. These markets are generally thought to have a large growth potential, and, in fact, they do. Which means that business strategies are oriented towards rapid expansion of services. In developed markets, an important question is how to optimize operations and coordinate existing care paths.

Info Box: The Healthcare Business International 2017 Conference

International executives from healthcare service companies, investors and visionaries in the industry are attending the Healthcare Business International 2017 conference in London from April 4 to 5. The theme for this year’s conference is Delivering New Healthcare Models. The conference is organized by the analysis and news platform Healthcare Business International (HBI); Siemens Healthineers is one of its strategic sponsors.

The goal of this event is to discuss strategically important trends in developed and emerging markets. Numerous presentations, roundtables and CEO workshops will cover subjects ranging from digital health, disruptions in the diagnostic sector and building international business, to measuring quality, organizational change and new payer-provider relationships. The conference has become an established industry-networking event. Last year, around 500 international executives attended.

“One of the biggest changes is in the value propositions to our customers.” Sourabh Pagaria
Global Head of Enterprise Services & Solutions at Siemens Healthineers

How are these developments transforming relationships between suppliers and providers?

Pagaria: One of the biggest changes is in supplier’s, and our, value propositions to our customers. Increasingly, they want to know how we as a supplier can help them optimize their business. We do not simply act as a vendor of devices, but try to offer business solutions. A provider in Brazil, for example, may ask us how we can support them to connect imaging services in a hub-and-spokes approach and to extend care delivery to remote locations. On the other hand, the shift to value-based healthcare and alternative reimbursement models in developed markets, such as bundled payments, is putting a greater financial strain and more responsibility on providers. This is also leading to risk-sharing agreements between providers and suppliers.

Could you give an example?

Pagaria: One example is managed equipment services or MES. In 2010, we signed a long-term MES contract with the Ministry of Health of Murcia in Spain, which was looking for a single partner for two hospitals to not only procure, but also thoroughly manage around 20,000 medical devices. We could provide our expertise, while the customer could focus on his core competencies in patient care. Indeed, the agreement has led to substantial declines in administrative equipment costs as well as downtimes and patient rescheduling. Another example is a recent engagement of Siemens Healthineers in Turkey, where, due to the lack of staff, we will be taking over the complete lab service operations for two large new hospitals.

“While there is increasing responsibility in the healthcare market for everyone, there is also a lot of excitement. There is a pull in the market.” Sourabh Pagaria
Global Head of Enterprise Services & Solutions at Siemens Healthineers

Thus, you are taking responsibility for part of the healthcare chain. Are vendors becoming providers?

Pagaria: Our partnerships are redefining the boundaries between suppliers and providers in a different way. Today, providers have to adopt more responsibility for patient outcomes and to focus on patient care, so they need partners stepping up to new challenges within the scope of their expertise as well. Specifically, providers expect us, Siemens Healthineers, to not only be a supplier of great technology, but also to help them extract maximum value out of it and hence expand our services around it. This can be a win-win solution spurring growth. While there is increasing responsibility in the healthcare market for everyone, there is also a lot of excitement. This is not only our idea as Siemens Healthineers. There is a pull in the market.

About the Author

Martin Lindner is an award-winning science writer based in Berlin, Germany. After his medical studies and a doctoral thesis in the history of medicine, he went into journalism. His articles have appeared in many major German and Swiss newspapers and magazines.

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The statements by Siemens’ customers described herein are based on results that were achieved in the customer's unique setting. Since there is no "typical" hospital and many variables exist (e.g., hospital size, case mix, level of IT adoption) there can be no guarantee that other customers will achieve the same results.