Siemens Medical, Catholic Health System Strike $100 Million Deal

Buffalo, N.Y.-based health care provider Catholic Health System last week announced a 10-year, $100 million agreement with Siemens Medical Solutions for medical imaging and information systems, with Siemens, of Melvern, Pa., guaranteeing to update the systems throughout the length of the deal.

Jeff Baughan, vice president of information technology for CHS, said the agreement provides for future new equipment while keeping costs under control. “Some of the future systems are just on the drawing board now,” he said. “Its a way to buy todays technology and enable you to continue to upgrade it while managing your investment.”

Baughan says the nonobsolescence clause is unique for the health care provider. Siemens spokesperson Molly Grasso said Siemens had offered such clauses “on a few occasions but not many,” adding that deals would need to last for at least seven years for such provisions to make sense for customers.

The CHS deal will provide a range of technologies, including magnetic resonance, computed tomography, nuclear medicine, ultrasound, angiography, catheterization laboratory and digital radiography systems. The health care network employs 1,200 physicians in four hospitals and several other treatment facilities.

Milton Silva-Craig, chief operating officer and president of Emageon, a medical images management company, said that most health care providers want obsolescence protection, particularly for software. Such arrangements work to the advantage of both technology suppliers and users, he said. “We charge with the assumption that there will be two major updates per year. From a vendors perspective, its a better way to manage your customers: Theres no surprises, everyones on the technology curve.”

However, he said, the largest health care providers are less interested in obsolescence protection for computer hardware or specialized equipment because they can often get better deals on upgrades by leveraging their purchasing power.

CHS Baughan said the nonobsolescence clause wasnt a deal clincher. “It was one of the pieces we considered in a multifaceted agreement, but I cant weight it more heavily than another facet.”

Still, the provision should keep the health system supplied with the latest imaging software and equipment, a factor Baughan said should help retain and recruit new physicians.

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