Frost & Sullivan Commends Philips' Results-driven Approach to Creating Customer Value

Philips-GRHealth alliance has saved the client company over $7 million and reduced its technology spending by 35 percent in less than two years

21 Dec, 2015, 09:00 ET from Frost & Sullivan

MOUNTAIN VIEW, Calif., Dec. 21, 2015 /PRNewswire/ -- Based on its recent analysis of the managed equipment services for hospitals market, Frost & Sullivan recognizes Philips with the 2015 North American Frost & Sullivan Award for Customer Value Leadership. The award specifically lauds the results from Philips's partnership with Georgia Regents Health System (GRHealth), a one-of-a-kind, $300 million, 15-year alliance. In its short two years of existence, the alliance has managed to enhance GRHealth's operational efficiency through centralized technology and operations management as well as standardized technologies and processes that improve quality and enhance patient care. According to GRHealth, the alliance has saved them over $7 million and reduced its technology spending by 35 percent in its first 18 months.

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"The current fragmented nature of healthcare is both an internal and external problem that leads to inefficient processes, inconsistent care implementation, avoidable service utilization, and unnecessary costs to the hospital and patient," said Frost & Sullivan Program Manager Swarna Sundar. "This state of affairs explains the birth of the Philips-GRHealth partnership, which aims to optimize technology resources and innovate care delivery."

Philips' managed service partnership model is based on a governance model wherein the company and GRHealth staff and executives work collaboratively at all levels of the organization to enact positive changes. After winning the contract in 2013, Philips' engagement with GRHealth shifted from a transactional, traditional sales model to an integrated, partnership-based relationship, with embedded resources and shared goals and metrics.

"While the sales model allows different departments to act independently to gain capital for system and device updates, the enterprise-based model requires the alliance team to identify needs and prioritize them based on the added value the solution would provide GRHealth in the overall scheme of things," explained Sundar. "For the latter model to work, the alliance determines where the market is going and which changes would result in the greatest clinical and economic benefits to the system. Philips' representatives attend GRHealth's capital, quality, and master planning meetings to help them with this process."

After singling out the most pressing needs, Philips experts work alongside clinicians to implement best-practice solutions and train staff to gain a high-value return for their technology investment. In addition to six full-time Philips personnel working onsite within the GRHealth enterprise, between five and 15 ancillary service providers, consultants, trainers, and clinical technology personnel are typically on site daily.

The financial model for the Philips-GRHealth alliance is based on a comprehensive but highly flexible plan for the system's equipment, maintenance, and transformation service needs. GRHealth pays Philips through a monthly unitary payment, which dramatically simplifies and stabilizes the client organization's capital planning as well as operational and cash flow structures.

Philips has more than 40 deep, long-term partnerships globally that are based on innovative business models such as the managed services model. As such, Philips' previous experience delivering managed services solutions in other markets has given it the confidence to go "at risk" in various aspects of its enterprise partnership model. By going at risk, if Philips solutions do not deliver a meaningful, previously agreed-upon impact, a designated portion of the annual alliance payment will be returned.

Encouraged by the success of this partnership, Philips signed a similar $500 million deal with Westchester Medical Center Health Network in June 2015 and, most recently, a CAD 300million large scale alliance with Mackenzie Health in Canada. The largest of its kind in Canada, the MES agreement aims to transform and improve healthcare for over half a million patients in the area.

Each year, Frost & Sullivan presents this award to the company that has demonstrated excellence in implementing strategies that proactively create value for its customers with a focus on improving the return on the investment that customers make in its services or products. The award recognizes the company's inordinate focus on enhancing the value that its customers receive, beyond simply good customer service, leading to improved customer retention and, ultimately, customer base expansion.

Frost & Sullivan Best Practices Awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis and extensive secondary research to identify best practices in the industry.

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