GE Healthcare: Jeff Immelt's Autobiography Reveals Why Zero Growth

The Former CEO of GE Jeff Immelt Has Written a Fantastic Autobiography, "Hot Seat."

Before Becoming CEO, Immelt Was the Divisional CEO of GE Healthcare--So He Has Extensive Healthcare Experience.

GE Healthcare is the 3rd Largest Medical Device Company in the World.  It Makes CT Scanners, MRI Machines, Ultrasound Scanners, Mechanical Ventilators and More.

GE Healthcare Has a Problem... It Has Had Almost Zero Growth.

In 2010, It Had Revenue of $16.9 Billion.  In 2020, It Had Revenue of $18.1B... Only a 0.69% Compound Annual Growth Rate.

Conversely, the Largest Med Device Company in the World--Medtronic--Grew 7% Per Year During the Same Timeframe... ~7X+ More Than GE Healthcare.

One Possible Reason: GE Healthcare's Business Model is to Sell Machines at Cost and then Make All of their Profit on the Service Contracts for Maintenance and Repairs.

Accordingly, GE Makes More Money the More Service Their Machines Need.

Immelt Tried to Create an Initiative Called GE Digital to Improve the Efficiency and Effectiveness of GE Products (i.e. less maintenance and repairs) and the Company Essentially Rebelled Against Him.  

GE Digital Was Eventually Scrapped.

The Point:  GE Healthcare Completely Missed the Healthcare Innovation of the Last Decade Because It was Married to It's Old Business Model and Could Not Change.

Similarly, Many Healthcare Organizations--from Hospitals to PBMs-- Are Also Married to Their Old Business Models and Are Having a Hard Time Changing.

If You Want to Change Healthcare, Working at a Large, Established Healthcare Organization is Likely NOT the Way to Go.

Disclosure:  Dr. Bricker is the Chief Medical Officer of Virtual Care Company First Stop Health.  Dr. Bricker holds NO short stock positions and only holds an S&P500 Index Fund long position.

Sources: 'Hot Seat' Book by Jeff Immelt

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