If risk-sharing contracts between healthcare providers and their suppliers pan out as the next big thing in the business of healthcare, Hitachi Medical Systems will have bragging rights as an early adopter.
Earlier this year the company began “eating risk for lunch,” to paraphrase the management guru Peter Drucker. Its customers are now getting five years of comprehensive support and service—gratis—with every Scenaria SE CT system they acquire, regardless of the provider’s choice of the 64- or 128-slice model.
Under this program, the “sharing” part of risk sharing seems misplaced. That’s no accident.
“Frankly, there is no risk to the provider, and there is some potential risk to Hitachi,” explains Sheldon Schaffer, Hitachi’s vice president and general manager of CT and MR. “We’re taking a calculated, controlled risk based on our knowledge and experience with the product. It is a highly reliable product with several years of experience behind it to prove out its value.”
In addition to helping Scenaria customers reduce total five-year costs, the program throws in such substantial value-adds as an uptime guarantee, online diagnostics, x-ray tube replacement and onsite applications training visits.
The latter benefit alone, Schaffer points out, demonstrates how far Hitachi is willing to go in order to show its confidence in Scenaria and its commitment to its customers.
“There is often fairly high turnover in technologist staff,” he says. “It is in both our customers’ interest and our own to make sure that every new technologist is fully trained and gets experience, quickly, so the facility is always working to maximum efficiency. I think this speaks to our product and our high level of customer support. It shows how this program represents a win-win situation for the customer and Hitachi.”
All-inclusive, all in tune
Back in January, when the social-media chatter around provider-supplier risk sharing seemed to be peaking, Matt Pesesky, a consultant with Advisory Board, Washington, DC, blogged about how he was hearing far more than he was, in fact, seeing.
Still, Pesesky expressed that Advisory Board is “quite bullish” on provider-supplier risk sharing and expects “to see many more successful models emerge in the next two to three years.”
Pesesky wrote:“[T]he best risk-sharing programs require much more than a willingness to ‘go at risk’ for operational impact or product performance. They’re born from a mutual commitment to trust, transparency and performance improvement. They require flexibility and compromise. And they’re best suited to products or services with a financial impact to the provider (e.g., cost savings, reduced adverse events) that can be reliably and repeatedly measured.”
Despite Hitachi’s assuming of virtually all risk in its new service offering—which the company calls its “All-Inclusive” program—Schaffer sees those ideals reflected in the offering.
“We think All-Inclusive will resonate with CFOs and radiology administrators because we are living in an era in which healthcare providers have a real need to control costs and become much more cost-efficient operationally,” he says. “This is our effort to address that need, be supportive and, hopefully, differentiate ourselves with a big economic benefit on top of a proven diagnostic imaging system.”
For some observers, Hitachi’s All-Inclusive program is sure to bring to mind what market watchers have seen with Hyundai Motor Co. over the past few decades. The car maker grew from being a manufacturer of decidedly affordable cars to the one offering the most aggressive warranty program—10 years or 100,000 miles.
That got a lot of people’s attention, and Hyundai started selling more cars. Today, having invested from those sales in R&D, Hyundai stands toe-to-toe with longstanding industry leaders not only on price but also on quality, design and reliability.
“There may be some parallels there,” Schaffer says when asked about the example. “We did look at other industries. And we certainly saw how other companies created opportunities to offer customers a financial value with a quality product that got to be even more highly respected over time.”
Schaffer notes that the All-Inclusive program only launched in early May, so it’s too soon to quantify the response. However, “there has been a lot of interest expressed, and we’re seeing an increasing number of business opportunities related to interest in Scenaria CT.”
“I think it’s safe to say,” he adds, “that it’s catching people’s attention.”
Hitachi may be eating risk for lunch today, but both the company and its customers stand to reap long-term benefits.