GE to Finance Healthcare Technology AcquisitionThu, 09/07/2017 - 10:11
Q: What is the future of GE Capital Health Financial Services as GE transforms into a more industrial company?
A: We have financed equipment acquisitions in Mexico for the last 25 years. However, GE Capital is undergoing a number of structural changes. We will be more focused on helping GE Healthcare with specific products and tailor made solutions developing new business models similar to the shared risk structure seen in the US. Even though it will take some time for this trend to catch up in Mexico, we are already doing things differently with our customers. GE Capital will eliminate all pieces unrelated to its four integral business solutions, which are Healthcare, Energy, Working Capital Solutions and Capital Aviation Services (GECAS). The company is paying more attention to its GE Healthcare division, which will increase sales in a smart and risk-controlled way by financing healthcare technology acquisition. GE is the only medical equipment manufacturer with a real bank supporting its capital and financial operations in Mexico.
Q: What is behind GE Capital's focus on the healthcare industry?
A: There are several opportunities with consumers acquiring new technology, which is especially true with doctors and health institutions. Although there are opportunities in the public sector that are worth pursuing timely payments are an issue. The industry pushes for equipment replacement every five to seven years, but the public sector does not have enough resources to fund this. As such, the lifetime of their equipment is extended by three, four or even five years, quickly becoming obsolete in an evolving environment. Large volumes of used equipment are imported to Mexico from the US, often in poor condition, which is one of the largest sources of competition within the Mexican medical device industry. As the US market grows it generates yearly tons of turnover equipment. But challenges related to investment remain. With the US reimbursement act the MRI studies has dropped significantly. However, annual per capita expenditure in the US is US$11,000, whereas in Mexico it is close to US$800. Considering some of our customers are major hospital chains and clinical laboratories expanding throughout the country their strong purchasing capabilities must be supported by financial solutions that will help them in this endeavor. Key players are expanding and consolidating their operations, opening up a new realm of opportunities for GE Capital.
Q: Tailored solutions like the shared risk model are already operational in other countries. When should we expect their implementation in Mexico?
A: Shared risk solutions are an essential part of healthcare negotiations in the US as they offer financing alongside actual solutions. There are instances where technology renovation can be easily achieved, which shows there is a market willing to purchase secondhand equipment. This will undoubtedly reach Mexico within three years. Another trend will be a plethora of investors and entrepreneurs in the healthcare industry. Today, there are several investment funds seeking opportunities in the industry. In the past, it was mostly physicians who were looking for funds to develop a business. With the digital revolution, healthcare services were lagging behind as all information was confined and considered strictly confidential. But new investors are trying to understand patient needs, and healthcare is being addressed directly from a supplydemand standpoint.
Q: Do you offer financial services to the government, and how are integrators enabling public institutions to acquire technology?
A: The value proposition of integrators is providing customers with technology, technicians, logistics, IT solutions and administrative tools for supplies and equipment. Formerly, public institutions acquired their assets from providers. Nowadays, a large percentage are managed by integrator companies, which led us to lending them money directly. Although public sector lending is not in our immediate plan this is something we will explore in the near future.