'A new world entails profound alliances'
The medical world took notice of his transfer. The former paediatrician and professor of paediatrics Jan Kimpen had led the UMC Utrecht for eight years when he announced in 2015 that he would move to the international, corporate world of Philips. Within Philips, which has been transformed into a technology business, he now holds the position of Chief Medical Offi-cer. In Utrecht Kimpen always had the idea that players in the healthcare sector were able to meet the challenges by doing their work more effectively and taking care of patients as well as possible. But when he started his job at Philips at the beginning of 2016, he changed his point of view: just working better, harder and in a smarter way is not the solution. Digital transformation is the means to provide proper healthcare to the fast-growing and ageing world population, 70 percent of which does not have access to healthcare at all, Kimpen says. Doctors, hospitals, suppliers and other players in the healthcare sector should organize their work differently and especially more digitally, Kimpen states. The role of hospitals will change, because patients are becoming far more responsible for prevention and taking care of their own healthcare needs. Kimpen is convinced that the healthcare sector should adopt a totally different approach, ‘because online connectivity and digitization are going to cause major disruptions, both in healthcare and in other sectors.’ At this juncture, digitization does not always benefit companies. Sometimes it creates more red tape. Philips wants to use digitization to make the lives of doctors and patients easier. This will lead to better medical decisions, personalized healthcare programmes, the large-scale use of portable trackers (such as wrist straps, and smartwatches that measure parameters like heartbeat, blood pressure, and oxygen saturation), remote patient monitoring and easily accessible and up-to-date medical records.
Interviewer and consultant Stef Oud, partner of A.T. Kearney, wants to know if Kimpen’s appointment is in line with the trend of value-based healthcare, maximizing the value of healthcare for the patient and reducing healthcare costs. Kimpen: ‘Certainly. In 2011 Philips started a transformation process towards producing and marketing medical technology. This concerns more than just riding the wave of technological innovation. The aim of Philips is ‘breaking the wave’, which involves the pursuit of large-scale, disruptive changes. If, as a supplier, you believe in the transformation of healthcare, you should yourself, as an organization, transform into a new business model as well. We are busy working on that now. And my appointment is in line with that. In his 2006 book Redefining Health Care, the Harvard professor Michael Porter already described the transition to value-based healthcare. In his view, this is focussed on maximizing the value of healthcare for the patient in combination with reducing healthcare costs. Costs are the main problem, because they continue to rise or they cannot be controlled to a sufficient extent.’
How do doctors feel about value-based healthcare?
‘They welcome this trend. If I look at the satisfaction figures of this professional group, or rather the dissatisfaction figures, there is still a world to be won. In the United States, 400 doctors commit suicide every year! This is partly due to the workload and red tape that overwhelms them, which is not exactly ‘value-based’. I always thought that digitization was the solution, also for doctors. But we still see little of that. It is not the case that digitization has made the work of doctors lighter, on the contrary. The average doctor spends about 10 hours a week doing the paperwork, also because secretaries have disappeared due to cuts. He cannot spend those hours on his patients. At this juncture, computerization is an extra burden for doctors rather than an innovation that makes their work easier, as was intended. We want to do something about that: about 60 percent of our investments in R&D are devoted to the development of new digital solutions. In them, we bring together systems, smart portable devices, software and digital services in order to support doctors in an integrated and long-term manner. These solutions use the Internet of Things, or IoT, cbud computing, artificial intelligence and predictive algorithms, and are aimed, on the one hand, to support doctors in making clinical decisions, and, on the other hand, to help to make their operational processes transparent and to perfect them. We want to make the work of doctors easier in this way.’
Can you give an example of this kind of innovative digital solution?
‘At present, every year sees 14 million new cancer patients worldwide. The expectation is that this number will increase to 20 million within six years. One in three people will develop cancer, although fewer and fewer people die from it. This means that pathologists, who can make a diagnosis with the help of microscopes or cell or tissue material from a patient, will be getting busier all the time. We have developed a digital pathology scanner that helps the pathologist to look directly at the right segment of the biopsy or an X-ray image: what deviates from the normal? This device makes smart choices based on algorithms that help doctors to understand the images, and so the device itself learns in the process. These are digital images, which you can easily send around to ask a fellow pathologist for a second opinion. This digital scanner facilitates the work of the pathologist and, which is certainly equally important, aims to reduce the chance of a wrong diagnosis.’
What instruction did CEO Frans van Houten give to you when you entered on your duties?
‘Philips was always a conglomerate with many clever techies and scientists, who came up with fantastic solutions and devices and subsequently looked for a problem and a customer group. It’s my task to bring the outside world within our organization: what are doctors, hospital administrators and patients really looking for? Where can we help them? I have a lot of contacts in the healthcare sector, I easily get into hospitals. Because of my background, I speak both the language of the doctors and that of the healthcare administrators. Whether it relates to research, product development or an acquisition, I can provide the clinical input. That is my added value. In that sense, my appointment fits very well with Philips' choice to shift to health technology. In the United States, for example, the media wrote that the appointment of a hospital administrator as Chief Medical Officer proves that Philips has opted for a different strategic direction.’
The current trend is that these hospitals outsource complete processes. For example, they do not buy a CT or MRI scanner, but 'imaging as a service'. How important is this trend for Philips?
‘It is becoming increasingly important to us as an integrated solution provider. At present, 29 percent of our turnover comes from this type of end-to-end solutions. By 2020, this should have risen to 35 percent. That is ambitious, but I really believe that we will succeed in doing so. For example, we sell complete heart catheterization rooms, with all the trimmings: the required hardware and software, workflow management, consultancy, service and maintenance, et cetera. A hospital outsources all of that to us. This automatically means that you enter into a long-term strategic partnership with each other. A good example of this is our cooperation with the Swedish university hospital Karolinska. In 2014, we concluded a comprehensive cooperation agreement with this hospital for a period of 14 years. We supply the latest imaging systems and services, such as MRI, CT, ultrasound and interventional X-ray systems. Not only our own but also those of other manufacturers. Our range of services relating to medical equipment includes procurement, system integration and timely renewal. Karolinska wants to grow into the most important imaging provider in Scandinavia. In addition, we have set up a research and innovation centre in this hospital. We are examining together how we can detect prostate cancer by means of our scanners at an earlier stage and how we can take action sooner after a stroke. We have also entered into many such long-term partnerships in the Netherlands.’
Because in the end, it’s all about the outcome for the patient.
‘Exactly. Together with the hospital, we bear responsibility for various KPIs, for example better diagnoses, shorter waiting and turnaround times. And, equally importantly, we take up the challenge together and share risks together, also in the financial field. For this, it is important that we break through the silos in healthcare and achieve more efficient exchange of images and data. Our solutions help to achieve this goal. We are seeking to help doctors to do their work better and to help them to make better diagnoses with the same group of people and to see more patients.’
If, as a hospital, you cooperate with parties like Philips, which are able to install complete end-to-end solutions, you do put your fate in the hands of another party – a hospital loses part of its autonomy in this way.
‘That doesn’t have to be a problem. If a hospital enters into a long-term alliance with a provider like Philips, we make proper arrangements about this. It is obviously important to have confidence in each other. But we are all at a turning point, going to a completely new world! This includes profound alliances. That applies to Philips just as well. We work more and more often with partners or startups, with which we would not cooperate readily in the past. We are cooperating with Medtronic, for example. We are now developing a patient platform with them for lung cancer patients, designed to streamline the process of making a diagnosis, from the first few symptoms to the treatment of the disease. As soon as a patient with lung lumps has been identified, software assists doctors in supporting the patient, which allows speedy evaluation of those who run the risk of contracting lung cancer.’
Who is the buyer on the side of the hospital: the doctor or mainly the administrator?
‘When I myself was chairman of the Executive Board in the UMC Utrecht, I never took a single decision about the procurement of equipment, such as an MRI scanner. As Executive Board, we adopted the investment budget of the radiology department for example. They were able to spend this budget fully at their own discretion. If they were short on money and they came to us with a well-substantiated story, then we considered the possibility of increasing their budget. That picture has now changed: increasingly, the administrators decide on purchases. This trend has its roots in the United States, where hospitals often collaborate or consolidate on a large scale and also act as their own insurers. For example, we collaborate with Banner Health in Arizona. That is an integrated healthcare ecosystem with 28 hospitals. All healthcare professionals are part of a single healthcare organization. You take an insurance policy with them and they ensure that you receive healthcare. This is also about prevention, healthy living, home monitoring, et cetera. You can only go to a healthcare professional outside the system if Banner Health refers you to this professional.’
What is the most promising digital development in the medical field, in your opinion?
‘No doubt, that’s artificial intelligence. In the end, this will help us most to allow doctors to do their work better and faster, with less frustration. All of us are sitting on a fast-growing mountain of data. Last year, news magazine The Economist published the headline: ‘Data is the new oil.’ And that’s the truth. But you can only do something with all these data if you can analyse them well and that can only be done with artificial intelligence.’
To achieve this, you should be prepared to share data. That is not easy at a time when privacy and cybersecurity are key words.
‘Indeed. Look, the more patient data we are allowed to use, the smarter the algorithms will be and the higher the quality of healthcare. That is an absolute no-brainer. The funny things is that people share all kinds of things about their private lives on the social media, but once they are patients, they often find it difficult to share medical data. The challenge faced by healthcare organizations is to convince consumers that data security is guaranteed. By making these data anonymous, you can already make good progress. Then you will be able to convince people to trust the system. But as long as the data are patient-related, you should devise a good system of authentication.’
Is healthcare in the vanguard of this development?
‘Banks and tour operators have made much greater progress. Healthcare is a conservative sector, and I don’t mean that as a value judgement. After all, human lives are at stake. This is also because of the business models in the healthcare sector, which do not make privacy matters any easier at all.’
Will you ever return to a hospital in your working life?
I had a fantastic time in the hospital, both as a paediatrician and as an administrator, with ups and downs. These will happen again within Philips, but that does not matter. That's part of it. Life is a journey and the hospital was an unforgettable station on this journey. I see Philips as my current station, which offers me great opportunities to contribute and develop myself.’
INTERVIEW: Stef Oud, partner at A.T. Keamey and digital transformation leader. Oud interviews and writes for Management Scope about new business models and organisations in transition. These contributions can be found under his profile.