News & Articles

Darn – I Don’t Like the Green Ones

The Changing Competitive Landscape
G. Wayne Moore, B.Sc., MBA, FASE

Why does one gigantic OEM company buy another gigantic OEM company, why do hospitals buy other hospitals, why do hospital systems buy other hospital systems, why does one huge healthcare technology management company buy another huge healthcare technology management company, why do private equity firms buy multiple small to medium sized service, parts, used system sales, and repair companies and cobble them together, and most importantly, as Karen Carpenter once sang; “why do stars fall down from the sky?” Coupled with the buying activities listed above, there is also the divesture phenomenon of conglomerates spinning off their healthcare businesses as stand-alone entities. Additionally, we have witnessed a relatively large number of innovative medical device start-up companies launching truly disruptive products in the healthcare technology space. These are all great “why” questions I get asked almost on a daily basis.  

Indeed, there has been and continues to be a lot of the above activity in healthcare this year. What does all this activity mean for the healthcare eco-system? How does all this impact everything from macro level supply-chain and contract management to micro-transactional service events such as getting an ultrasound probe repair, or a PM done on an ultrasound system? One very notable example of a potentially landscape changing acquisition was the purchase of Aramark’s healthcare technology management division by TriMedx – kind of the scale of the yellow fish swallowing the red fish in the cartoon above. Does this type of an acquisition necessarily benefit the hospital, does it benefit, hinder, or impact the individual HTM professional in any way that makes them change what they are doing on a day-to-day basis? So, the “why” on one side of the equation must give rise to the analysis of how the “why” may impact the “affected” on the other side of the equation. Now, stay with me because this can get a bit tricky to sort out.

It may seem axiomatic to say that an acquisition or divestiture is driven by any given company’s business model, that explanation is, however, both simplistic and incomplete.  Business models are not static (at least the good ones are not). They must respond to internal company changes, as well as external company changes. In 2018, as never before in history, the pace of technological changes greatly impacts the shelf-life of any given business model. For example, because of the relative stability of technology in 1975, a company might have developed a new widget in-house or developed a new business segment and re-purposed its core technology in another form in another market space; i.e., there was time to develop these things. In 2018, because technology is changing so quickly, it may be more prudent to simply acquire a company that is currently doing what you want to do, or who makes a cool new disruptive product you want to add to your well-developed world-wide sales channels. It is said that “small companies innovative and large companies dominate,” that has never been more true than now. Expect to see more of this in 2019, perhaps a lot more. I get that business models for products, and theoretically a cool new product in the portfolio of a huge multinational corporation, may find its way into the hands of more clinical users worldwide thereby spreading the benefit of the device to a much larger patient population.

But what about acquisitions of in-kind companies such as TriMedx acquiring Aramark’s healthcare technology business? What impact does this type of an acquisition have on the supply-chain – is it a net gain or a net loss for customers?  I get why they do it, but I am not convinced that there is a substantial real benefit to customers – in my experience less competition tends to drive up costs and lower the quality. The same phenomenon often occurs when a private equity firm gobbles up multiple players across multiple product types in the same space – much like the entire cartoon. I have experienced first-hand what can occur in this scenario – the yellow fish winds up not “liking” the green fish and simply kills it, depriving the market of what was once a great resource. I have also seen the green fish come back to life in the market and provide even greater products and services to its customers.

So, what do we make of all this? Make sure that you have a back-up plan in case your current vendor is acquired!!


Until next month,



About the Author, G. Wayne Moore:
A 30-year veteran of the diagnostic ultrasound market Wayne has held senior level positions with several major medical equipment manufacturers, including Honeywell Medical Systems and Siemens Medical Solutions. Wayne has been directly involved in the development and commercialization of more than 15 technologically intensive ultrasound systems. He is widely published in diagnostic ultrasound literature, a sought after speaker at medical imaging conferences, has served as an expert witness in multiple ultrasound litigations, and holds more than 16 United States ultrasound related patents. Wayne obtained his MBA from the University of Denver – Daniels College of Business.

He was elected as a Fellow of the American Society of Echocardiography (FASE) in 2009.

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Correspondence: Dave Dallaire
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October 8, 2018 Newsletter