GE's Healthymagination could help the US reduce health care costs
GE will spend its cash on 100 health care related technologies, like low-cost digital X-ray machines, portable ultrasounds and more affordable cardiac machines. The hope is to lower costs for doctors and hospitals, which would translate to lower costs for families and businesses. This research and development is where GE will invest $3 billion of the dollars by 2015. The company will also work with partners to focus innovations on four critical needs, expand its own employee health efforts and to help increase the "value gap" between its health spending and GE Healthcare's earnings. GE will draw on technology from its entire company, including GE Healthcare, GE Capital, GE Water, NBC Universal, the GE Global Research Center and the GE Foundation.
GE CEO Jeff Immelt noted, "Health care needs new solutions. We must innovate with smarter processes and technologies that help doctors and hospitals deliver better health care to more people at a lower cost . . . Healthymagination is our business strategy that seeks to help people live healthier lives, support customer success and help GE grow." Immelt added, "We will invest in innovations that measurably improve cost, access and quality. That means lower-cost technology for more customers, products matched to specific local needs and process expertise to help customers win."
Yes, this is a project that the company predicts will be good for business -- Immelt said so himself. Let's parlay that into a glimpse at the stock's technical performance before I give you the editorial comment I know you all crave.
The stock is in the process of staging an intermediate-term rally -- although the long-term picture isn't great. GE's 10-month moving average is descending into the picture, and this trend line has acted as resistance since April 2008. While the equity may receive some support from its intermediate-term trend lines, the long-term resistance may be more than the stock can handle.
Now for the editorial: I like this initiative. It is always a good thing to provide people what they need at a lower cost. GE aims to lower the cost of procedures and processes using GE technology by 15 percent, to increase people's access to health services and technologies by 15 percent and to improve the overall quality and efficiency of health care by 15 percent by simplifying and refining procedures and standards of care.
I give the plan an enthusiastic standing ovation, even if it's not reflected in the stock price any time soon. It's about time someone did something about health care costs in the United States. We know it won't be the doctors, so why not a company providing the technology to the doctors? Good move, GE. Let's hope that other companies, people and politicians catch on to the ingenuity of what you're doing and try to jump on the bandwagon.