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A new business model for a better future



In this summer’s sci-fi movie Tomorrowland, a jaded scientist, played by George Clooney, grumbles, “When I was a kid, the future was different.” That shouldn’t be bad news. It’s the kind of challenge each generation faces when given the opportunity to create a better future for the next.

And nowhere is that challenge more important than in the field of healthcare, where countries and communities face aging populations, growing chronic and lifestyle-related diseases, while healthcare systems struggle to increase access and quality of care in the resulting environment of spiraling costs. Healthcare as we know it is rapidly evolving as people increasingly seek to be active participants in their personal health and as the needs of consumers and clinicians connect in new ways across the health continuum – from healthy living and prevention to diagnosis, treatment and home care.


But with the pace of change and the scope of challenges facing healthcare systems, tomorrow’s healthcare can’t be just a more effective or efficient continuation of today’s healthcare – even today’s best. Tomorrow’s healthcare calls for a realignment of incentives – by hospitals and health technology companies – with patient care as the focus. Breakthrough business models built on shared innovation and mutual accountability for maintaining and improving the quality of patient care, while managing costs, complexity and risk can make tomorrow today.


For most hospital systems today however, simply having the ability to plan for the future with confidence would be a welcome luxury. It’s no secret that on top of the demographic, disease and financial burdens, uncertainty and rapid change continue to complicate the delivery of U.S. healthcare.


This increased complexity means valuable time is spent making (and second-guessing) decisions related to new technology selection, maintenance and service guidelines– not to mention time spent trying to balance clinical and financial priorities. Too often, hospital executives find that meeting these demands comes at the expense of patient care delivery.


What hospital systems need are new business models that minimize these issues through the formation of long term, deep strategic partnerships with fellow healthcare innovators that can maximize the complementary talent and experience capabilities of both. Philips’ new enterprise partnership model does exactly that. It’s a business model innovation for healthcare transformation and creates a different reality, where health technology companies and hospitals/health systems work together as a team, literally every step of the way. However this is not your usual supply and demand business relationship. In fact, this breakthrough model totally reinvents the vendor/health system relationship over the long term.


Philips joins with its hospitals/health system partners to strategize, plan, design, purchase, optimize and deliver services that help improve quality of care throughout an entire health system and community, not just for today or even next month, but for years into the future. Here’s our newest and record-setting example.


(Yesterday), Philips and Westchester Medical Center Health Network (WMCHealth) committed to a groundbreaking multi-year, $500 million alliance, unprecedented in scale and scope, which demonstrates both organizations’ commitment to business model innovation to drive positive change for the Hudson Valley community. WMC Health, a 1,500-bed, seven-hospital health system headquartered in Valhalla, NY, and serving more than three million people, has a vision for their future. They want to increase proactive patient involvement for better outcomes, reduce healthcare costs, and guarantee the people they serve ongoing access to world-class healthcare innovation, while also improving management systems and decision support services.


The Philips-WMC Health model is structured to support WMC Health’s rapid transformation from a single-campus academic medical center to the preeminent, multi-campus provider of integrated healthcare in the Hudson Valley. That means extending care beyond the hospital into the community – one of the most important success factors in a value-driven reimbursement environment.


How will the Philips-WMC Health alliance help the health system’s leadership meet these critical goals? For one, it gives them a framework to expand access to advanced health innovations through a unified platform that consolidates digital technology, operations management and care delivery. It puts in place a unique joint alliance team and shared governance model that says, “We’re all in this together.”

Secondly, the agreement is funded through a flexible, unitary payment structure that gives WMC financial stability and predictability when it comes to capital and operating expenses. Anyone in healthcare today understands the value of certainty in the rollercoaster world of healthcare delivery.

While the Philips-WMC alliance is unprecedented in its size, a similar partnership with Philips and-Georgia Regents Medical Center (GRMC) was formed in 2013. Almost two years ago today, the two healthcare leaders signed a 15-year agreement to focus squarely on the system’s increasingly patient-centered care along with current and future clinical, operational and equipment needs of the Center’s many sites.


Shelving the outdated supply and demand business model, GRMC worked with Philips to develop a long-term shared accountability model to help deliver faster, more effective and cost-efficient care while impacting all major care areas, from radiology to pediatrics, oncology to, neurology to research and development.


Like WMCHealth, the Philips-Georgia Regents alliance was built on a joint belief in the ability of world-class innovation, whether clinical or operational, to transform the delivery of healthcare.


At Philips, designing and delivering innovative health solutions for a changing world is our mission and our passion because we believe the future can not only be different, it can be better.

Brent Shafer

Chief Executive Officer, Philips North America

In February 2014, Brent assumed the role of Chief Executive Officer of Philips North America. His responsibilities include management of all Philips businesses in Healthcare, Consumer Lifestyle, and Lighting and its supporting operations, along with leading its 22,000 employees in North America.


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