General Electric Co said on Thursday it plans to invest $6 billion by 2015 to help its healthcare customers cut costs, in a push the biggest U.S. conglomerate is calling Healthymagination.
The drive will focus on research and development of new technologies to cut by 15 percent the cost of using GE's CT-scan machines and other devices.
It will also aim to spur sales of systems to track medical records electronically -- a key priority that the Obama administration is allocating stimulus spending to encourage.
GE will focus on simpler, less costly equipment, such as portable ultrasound machines, which can be more quickly phased in at smaller hospitals and medical facilities in the United States and emerging markets abroad.
We're going to have more products at different price points in the future, Chief Executive Jeff Immelt told reporters in Washington. We can make money solving big problems on big global stages with technology.
Immelt compared the initiative to GE's Ecomagination green-business push, which it launched four years ago and last year sold $17 billion of wind turbines, compact-fluorescent lightbulbs and other energy-saving devices.
GE and chipmaker Intel Corp last month said they were joining forces in another healthcare venture, working to develop devices to help doctors monitor patients health remotely.
Immelt has made healthcare a major focus for GE saying that major changes are needed to the U.S. healthcare system and arguing that GE stands to make money by selling equipment that will help to make those changes.
The Fairfield, Connecticut-based company plans to invest $3 billion in research and development on new healthcare products, to provide $2 billion in financing to help U.S. doctors and hospitals phase in electronic medical record systems in lower-income areas and to invest $1 billion to develop other GE products to help its healthcare customers reduce costs.
GE Capital will provide the funding to help doctors and others buy the company's digital systems.
The U.S. government is providing roughly $19 billion over several years in part for health-care providers to move from paper-based patient records to more efficient electronic ones. Many doctors have lagged behind amid concerns over initial costs as well as changing standards that could leave early systems obsolete.
GE said it would have made the move even without federal funding but noted that its financing would help providers qualify for the incentive payments.
GE Healthcare, already one of the nation's top sellers of electronic record systems, is well-positioned as a big company that has name recognition, company officials said.
We have staying power, Immelt told reporters.
GE's rivals in medical imaging include Philips, Siemens AG and Toshiba Corp. Its GE Healthcare unit last year earned $2.85 billion on revenue of $17.39 billion.
The world's largest maker of jet engines and electricity-producing turbines also said it would focus on improving its employees' health, including providing incentives for its more than 300,000 workers worldwide to take better care of themselves.
Ahead of the event, Immelt told reporters that GE Capital was doing better than the forecast the company had developed using the Federal Reserve's base-case assumptions for the U.S. economy.
Shares of GE, which has a large finance arm, were up 3 percent to $14.03 on a day when financial-services shares were broadly higher amid investor relief that recent government stress tests are expected to show that most banks are healthier than previously thought.
(Reporting by Scott Malone in Boston and Susan Heavey in Washington; Editing by Derek Caney)