Last Monday, in the middle of all the excitement at RSNA, HCB News sat down with Philips CEO Frans van Houten to find out how Philips aims to stay ahead of the competition, what to expect people discussing at next year's RSNA meeting and how to prepare for the age of clinical data scientists.
HCB News: How does a software and computing focus change the requirements for meaningful innovation?
Frans van Houten:
Innovation leads to relevancy but relevancy needs to be in the eye of the user not in the eye of the development engineer at Philips. You can always make a better product that adds value to the customer but we believe that we can go beyond the product to understanding the clinical relevance and workflow of how our products are being used - we call that a solutions orientation and we have a deep collaboration with clinicians to understand where their unmet needs are.
As an example, we have a new OB/GYN ultrasound machine that is not just creating an image but helps with diagnosis so you can immediately do an image guided biopsy from the same machine and in the same workflow. That's a huge advantage because you don't need to shift the patient from one setting to the next. Why did we include that? Because we heard from our customers that this kind of functionality could improve outcomes and productivity.
Workflow optimization, eliminating unnecessary steps, reducing variance with better position - this is all where AI and computer power will find their way. Philips has committed itself to end to end productivity and outcome orientation, which also means we are much more an informatics company than ever before — 60 percent of our people in R&D are in software.
HCB News: It seems like success in a software-focused industry requires a higher degree of fluidity that conventional business models, would you agree?
I am not sure the distinction is software or hardware, it's clinical practice versus product. We need to get out of our labs and into the work environment of our customers to really understand how we can make them more productive or efficient. Once you understand that clinical need and the economic reasoning then you can design a better product.
The other thing, and this is maybe where fluidity comes in, an organization is never rightly set up in this context because when you think about workflow as radiologist, pathologist, oncologist - you cannot optimize on a single modality. Instead, you need to think about interoperability and ecosystems and ease of workflow, which has led Philips to change its innovation approach where we expect business units to work together.
We have one unit that focuses on all these software applications, and not only for a workstation but scalable to enterprise level, like an IDN with multiple radiology departments. You want to understand practice management and variance and all of this with scale from single workstation to entire IDN and then optimize from there.
We have platforms, architectures, design rules and design languages that everyone needs to stick to. Then we have specialty groups — but it is indeed much more complex than the old business unit that functioned separately.
HCB News: Is 2018 going to be another year of big acquisitions for Philips?
Acquisitions play a role to compliment the competencies or helping get into adjacent spaces like Volcano or Spectranetics, whereas a company like TomTec or PathXL was an adjacency of a group of people where we said, 'Hey come to Philips,' at a price, of course.
What I always tell investors is that the core of our growth strategy is organic so we spend an immense amount on R&D so that should have a return that results in growth. I would expect that to also continue in 2018.
HCB News: How is RSNA 2017 different from last year's meeting?
RSNA just started (laughs
) but for the whole year we had a very good year. We feel good because all the pieces of our strategy are coming together, we see the result in terms of financial accomplishments, med tech investors becoming interested and seeing value.
All these solutions are coming to the market and it's a world that is full of marketing and claims being made - for example with AI, I feel we get recognition from customers about the practicality of our approach because we help customers make simple steps rather than a 'holy grail, radical, everything is different' type of thing which doesn't work. So it's been well received by our customers and new customers who have opened their doors for us — so it's a good year.
A few years ago at RSNA the word AI was unsettling to radiologists but people are now realizing that maybe it can help rather than substitute — although I did hear some radiologists say that certain aspects will be replaced by automation; a large part of the technician workload, for example, so maybe they will have time for patient engagement. I am not saying the labor will go away but things can be done better with smart machines.
Philips believes that radiologist will become the clinical data scientists. We see a need for someone in the hospital to take a holistic view around data, around patients and workflows going beyond silos and i think the radiologist will be, from an education point of view, capable to evolve in that direction - but it means maybe some of the more menial tasks of reading, calculating and assessing can be automated.
HCB News: That seems to tie in with the RSNA opening session, where it's becoming less about one individual's reading and more about building this team approach to imaging.
I think there are various reasons for a team approach, whether capacity is not always where it needs to be or the specialist is in the wrong place... through the cloud you can bring them together. But there is also the issue of variance and quality assurance.
There will always be some people who are fantastic but if we can package their knowledge and support other practitioners to do a better job then that's desirable, but yes it does mean the soloist attitude will go away.
HCB News: We see all these cutting edge solutions at RSNA but a lot of this is stuff that hospitals and imaging centers across the country and throughout the world won't have access to. How does Philips make itself valuable to those hospitals?
Our preferred engagement with customers is an ongoing relationship and not a transactional relationship. If we sell someone a product and don't see them for a year then that's not very effective in terms of optimizing clinical outcomes and productivity - so we would rather be a partner to the hospital.
HCB News: In the form of service.
Exactly. So pivoting from a transactional model to a service model means we can stay better in touch with the customer and the focus should not be on the device but on the workflow and the processes and a service orientation suits that — but it also helps to reduce the threshold of adoption. Why should a hospital have to fork out so much money for something that they don't get the best use out of? Redesigning workflow, first time right, less waste... that's what we're trying to bring to the market.
HCB News: How would you say Philips distinguishes itself from other major OEMs?
We are committed to the space. Philips has made its transformation and made our choices, we have no where else to go but to be successful in health tech. I think customers appreciate the stability that comes with that and knowing we are investing in the space with high R&D, we are acquiring companies.
Also, the solutions approach, where we want to be the systems integrator for the hospital. We don't want them to struggle with interoperability and sub-optimized silos but rather an end to end approach. Hospitals are pivoting toward a patient-centric, workflow orientated approach and I think that is the future so I think we are much more ready for that future given the choices we've made.
HCB News: This year at RSNA it seems like artificial intelligence and 3-D printing are the very buzzworthy topics... what will everyone be talking about next year?
Well, hospitals have been doing 3-D printing for a while using our data sets, we've made it easy and it may become more mainstream — which is good. What do people come for and what are they really interested in other than satisfying their intellectual curiosity? It's really about productivity - and outcomes. Those (AI and 3-D printing) are two technology angles to that statement.
We're seeing AI embedded in the workflow, not as a separate gadget — don't overhaul everything just make it more efficient. That means AI is not a big bang but touches many angles.
I don't disagree that those are buzzwords that are active now but what I'm happy with is that people are talking about it in a more practical way whereas two years ago it was more of a shadow or a cloud but now people are asking - what will this do for me? That's absolutely the right question.
So, what will we see next year? Well, if today AI is focused on productivity; a better image and a better job done, then tomorrow or whatever -- 12 months from now -- it's going to be more predictive and forward looking. It's exciting and we are already starting to see it in our apps, we can predict how a patient will be doing hours later, in our monitoring we see that, but I think what doctors will need is further synthesis of all the information.
The synthesis of data toward what will be a predictive model, enabling a more meaningful dialogue between doctor and patient.