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What is more important: diagnostics, therapeutics, or prognosis? While all are important, we will in this column see how past history has addressed this question and also how recent events, such as GE's
acquisition of Abbott's
diagnostics units, shed light on this fundamental issue.
It is all too easy to take modern medicine for granted, to not delve too deeply into its assumptions and to regard it as having simply just appeared. However, considering the historical origins of Western medicine, reference is made to Hippocrates
, who is often called the father of Western medicine. This is not entirely true.
In ancient Greek times, there were two schools of thought in medicine: the Knidian, which focused on diagnosis, and the Hippocratic (or Koan) school, which focused on patient care and prognosis.
With the limited knowledge and techniques available then, the Hippocratic approach - with its emphasis on passive treatment and more generalized diagnosis - was more successful. Therefore, we have been handed down the legend of Hippocrates as founder of our current medical culture.Second fiddle
Of course, today's medical practice focuses on diagnosis and, above all, specialized and aggressive treatment (both of which were hallmarks of the Knidian method). A story comes to mind. Back in 1993, during the first World Trade Center bombing, I was at the Columbia University College of Physicians & Surgeons
It was a frightening time for the entire city.
As with many other large buildings and public centers, the medical center was in a virtual lockdown. The chief of security sent out a notice stating something to the effect of: We are instituting these measures to protect the safety and security at our treatment centers.
While his emphasis on treatment facilities was simply an oversight, a radiologist friend of mine couldn't help but cheekily point out whether it meant that diagnostic centers were to be left as open targets. While we were not often in a joking mood during those days, it did point out how deeply ingrained our focus on treatment has become.
While diagnosis plays second fiddle, what about prognosis?
If treatment has appropriately become the centerpiece of our medical system - deserving, so it would seem, of extra security during a terrorist crisis - then why all the recent events (such as the GE acquisition of Abbott diagnostics) in this area? What is driving all this? What is the prognosis for diagnosis?
By way of background, GE and Abbott on Jan. 18, 2007 announced a definitive $8.13 billion cash deal for GE to acquire Abbott's in-vitro and point-of-care (i-STAT) diagnostics businesses. In-vitro diagnostics basically refers to diagnostic techniques done outside the body (typically on body fluids or tissue samples).
At Abbott, these are mostly machines and lab tests in areas such as hematology, immunochemistry, transfusion care, and diabetes. Abbott's point-of-care diagnostics focuses mostly on the cutting-edge handheld i-STAT system. It allows clinicians to take blood-droplet samples at the bedside or the ER station and, with different cartridges, have results in a matter of minutes.
Both are cutting-edge technologies and are an excellent potential fit alongside GE's core diagnostic imaging business. There are at least three essential trends that make this a good fit for GE on the marketing, technology, and cultural side. They are:Marketing strengths specific to hospitals
The large machines (such as MRI scanners) that GE develops and sells are typically bought directly by hospitals. Given the cost, they are most often sold at the most senior levels. Many of Abbott's products - such as its pharmaceuticals and devices - are marketed mostly through physicians and direct-to-consumer channels.
GE has a significant marketing advantage and experience when it comes to big-box purchases. Moreover, the GE commercial finance arm also facilitates the ability to purchase these big boxes through leasing or other arrangements. The same marketing strength can also be applied toward large, laboratory-based in-vitro diagnostic machines.
Although many of these tests are outsourced to outside laboratories, similar marketing capabilities apply.Convergence of biologics and radiology
In the fall of 2004, GE completed an 8.1 billion acquisition of United Kingdom-based healthcare company Amersham
. Its medical diagnostics unit is a leader in developing and producing contrast agents for use in diagnostic imaging.
While previously diagnosing diseases during the conventional X-ray era on the basis of differences in tissue density, the concept is that radiology was moving into more specialized and personalized capabilities to see differences in signal on the basis of biological characteristics and not just physical parameters.
In essence, this is called in-vivo diagnosis. How might this play out in the context of the Abbott acquisition?
In this case, the synergy for GE is less on the marketing side and more on the technology or development side of the business. Having additional strengths with in-vitro diagnostic technologies can also easily play into new and improved, imaging-based diagnostics for GE's product pipeline.Radiology as a point-of-care service
With the increasingly rapid images that are now available with CT and MRI scanners, GE has created a new paradigm in medicine. GE is not joking when it calls its new scanners by the moniker of LightSpeed, as these full-body scans can now be done in minutes if not sooner.
That means that radiologic diagnoses can be done at the bedside with a portable scanner, in the CT/MRI suite or in the ER, as opposed to getting your results later that evening. If you can do that with a huge, multimillion-dollar MRI machine, why can't you do that with a simple blood test?
Indeed, that is the premise behind Abbott's point-of-care system. This is how the cultural paradigm that GE has created with its point-of-care radiology can be readily translated into the cultures and systems necessary to support point-of-care laboratory diagnosis.
While the marketing overlaps and the technology benefits are quite different between GE and its new acquisition, it is the cultural synergy that makes this particular part of the acquisition very plausible.GE's acquisitiveness
GE CEO Jeffrey Immelt says the Amersham acquisition
will change the face of healthcare. Indeed, GE has already been doing that. The Abbott acquisition may very well accelerate that trend. However, GE's acquisitiveness has its limits.
Interestingly, Abbott's molecular diagnostics division was not a part of the transaction and will remain with Abbott. Also significant is the fact that Abbott, in Sept. 2005, made a substantial investment in its molecular diagnostics division with a new, 208,000-square-foot headquarters
on 17.5 acres in Des Plaines, Ill.
According to Abbott, its molecular diagnostics group provides tests and automated instrument systems to detect pathogens and subtle changes in patients' genes and chromosomes, which permits earlier diagnosis, the selection of appropriate therapies, and improved monitoring of diseases.
Although deconstructing a press release
does not usually count as high-end literary criticism, reading more deeply reveals some important messages.
In this regard, Abbott may be considering its in-vitro and point-of-care businesses as commodities compared to its molecular business. Without the infusion of GE's hospital-based marketing focus, GE's advanced radiologic technology and GE's developing point-of-care culture, the commoditization of diagnostics may very well be true.
To avoid this fate, Abbott has, over the past few years, decidedly moved its strategy from being a traditional pharmaceutical company to being an integrated innovator in a number of lines of medical technology.
Abbott has entered the device sector - most notably the drug-eluting stent (DES) sector with the recent acquisition of Guidant's
vascular division - as well as ever more sophisticated molecular therapeutics and molecular diagnostics. For the latter, the strategy would seem that personalized medicine and in particular prognostic medicine is the wave of the future.Diagnosis prognosis
The prognosis for diagnosis is prognosis. Less obtusely, the emerging concept is that diagnosis is inexorably becoming increasingly specific, which unlike during the time of the ancient Knidians or Hippocrates, had previously not been possible.
There's a huge difference between diagnosing a patient with breast cancer (even of a specific histologic type) and knowing that they have a specific HER2/neu gene mutation that causes such a disease to be uniquely aggressive. The prognosis in that case is completely different. To a patient, that is very important information.
Ultimately, it is prognosis that patients want.
While it might be a matter of cocktail discussion as to whether one has a certain genetic profile, what people really want to know is what it means for their life, how long they will live, and how well they will live. To answer the question posed at the beginning of this column, most people will agree that in this context, prognosis ranks first.
Abbott is betting on the supremacy of prognosis. While the GE acquisition makes excellent business sense for GE, the future lies with those companies that can accurately, relevantly, and usefully bring prognostic information to clinicians and patients.
This is not easy since prognosis integrates multiple pieces of data from the patient's history, physical examination, laboratory tests, radiologic investigations, and so forth. Experienced physicians are able to integrate all this and make accurate and relevant prognoses.Missing IT piece
The missing picture for Abbott and GE is to bring integrative knowledge into the process. Specifically, this means artificial intelligence programs and other IT-based systems that can integrate multiple lines of evidence and data.
In this regard, Abbott and GE don't yet have the edge in moving into the future of prognosis. Perhaps another acquisition of a healthcare or medical information and knowledge-processing company may truly make Abbott or GE into the leading purveyor of prognostic products.
That's my prognosis.Previous article by Dr. Ogan Gurel
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Dr. Ogan Gurel is chairman of the Aesis Research Group, which provides forward-looking information and research services to the healthcare and life sciences investment community. Gurel was previously CEO of Duravest, a publicly traded Chicago investment company that initiates and develops next-generation medical technologies. Previous to Duravest, he was a vice president and medical director at Sg2, a healthcare intelligence think tank and consultancy serving hospitals and health systems. He can be e-mailed at email@example.com
This article previously appeared in MidwestBusiness.com
, and was reprinted with its permission.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
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