In June, Agfa-Gevaert NV announced plans to split into three independent businesses: HealthCare, Graphics and Materials. The move was part of Agfa’s continuing effort to transform from an analog imaging product company to one focused on digital imaging and health IT systems. By making these changes Agfa hopes to shave $320 million from its operating costs, a good portion of which must come from the HealthCare group.
Health Imaging News spoke with Bob Pryor, president, Agfa HealthCare Americas, to get his take on the current health IT market, and what the recent streamlining efforts mean for Agfa HealthCare’s North American divisions.
What do you view as the biggest factors driving the healthcare IT market as it currently exists in the U.S.?
There are three factors stimulating the healthcare IT market. First is the requirement to improve the effectiveness of healthcare delivery by reducing medical errors and improving overall outcomes. A second factor is the requirement to lower cost by improving the efficiency of healthcare delivery. It is believed that both effectiveness and efficiency can substantially be enhanced by creation of an electronic health/medical record (EHR/EMR). A third factor stimulating healthcare IT is that today’s technologies and solutions are increasingly becoming more affordable and more viable.
Will this remain constant over the next two to three years?
We believe at a minimum this is so. Actually, our opinion is that these factors will serve to accelerate healthcare IT focus and expenditures over the coming years. We’re beginning to see stronger healthcare IT spending in smaller community-based hospitals and imaging centers. Although many of these facilities did not initially seek the solutions enjoyed by larger acute care hospitals, today they are.
Additionally, expenditures are increasing in many acute care facilities, as well, as they begin to take advantage of better, more affordable IT technologies and solutions. More and more, we see healthcare IT expenditures, in general, directed to improve clinical reach throughout the continuum of care. Hospital-centric solutions are no longer viable. Healthcare IT solutions are expected to bridge all streams of care.
I might add, this demand is requiring suppliers to consider rapid evolution and often expansion of their technologies and solutions. This will lead to consolidations over the next five to ten years in the industry, with fewer and larger healthcare IT suppliers emerging.
How is this relevant to the current cost savings and streamlining efforts that have been underway at Agfa over the last few months?
Agfa’s current cost saving and streamlining efforts are in line with what you would expect given the changes Agfa has undergone. For years, Agfa was known as an analog imaging company, with predominant strength focused on core manufacturing and delivery of technology in the analog imaging arena. Over the last several years, Agfa has divested what was our former non-destructive testing and consumer imaging businesses and made a series of acquisitions supporting our remaining HealthCare and Graphic Systems businesses. So, part of our cost savings initiative has been to right-size our global infrastructure to address these changes.
Another part of our streamlining effort has been to manage the market shift from analog to digital imaging which continues to affect both our HealthCare and Graphic Systems businesses. Our efforts focus on ensuring that our costs remain in line with the declining analog imaging solutions in both businesses with particular emphasis on manufacturing.
As for our HealthCare business in North America, a large percentage of the streamlining is already behind us. You will, however, continue to see some shifting of our resources from analog imaging to IT as the market demands. So, regarding the recent Agfa cost saving initiatives, most of Agfa’s HealthCare change will be outside of North America.