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How Can Healthcare Companies Deliver the Ongoing Value of AI to Care Providers? Subscriptions

Physicians around the world use medical imaging equipment manufactured by Siemens Healthineers, amongst other providers, to produce millions of medical images every year. Medical images contribute to a continuously growing pool of multidimensional health data ranging from electronic medical records, image databases, and other multi-layered health IT systems.

In harnessing the potential for better and more effective care from this exponentially growing data is where artificial intelligence comes in. AI-based technologies help care providers utilize mass amounts of data for making up-to-date, patient-oriented decisions and designing care processes accordingly.

Siemens Healthineers recognized early on that AI — a phrase largely used to describe the capability of a computer to perform tasks or reasoning processes with intelligence approximating a human being — has the potential to support smart data integration that provides a more comprehensive picture of the patient and allows holistic decision-making in medicine.

But how does a company that offers continually evolving digital solutions — based on AI-technology — deliver that value to customers who predominantly only make an equipment purchase every two to three years?

Hunger for Healthcare-Related AI

There’s no question that the healthcare industry is hungry for value.

A recent report by McKinsey found that VC funding for the top 50 firms in healthcare-related AI reached $8.5 billion in 2020. And the COVID-19 pandemic has provided convincing justification for that investment.

For example, the AI system at Mt. Sinai Health System in New York City detected 68% of COVID-19-positive cases in situations where radiologists interpreted those cases as negative due to the negative CT appearance.

Siemens Healthineers is committed to delivering AI-powered solutions addressing relevant challenges in the healthcare field. With more than 60 AI-enriched offerings, the company helps to automate and standardize not only workflows, but also complex diagnostics to meet the needs of individual patient care pathways.

Siemens Healthineers AI-Powered Solutions

As an example, Siemens Healthineers offers a family of AI-powered, cloud-based augmented workflow solutions called AI-Rad Companion*. AI-Rad Companion automatically performs measurements and prepares results in the form of clinical images and reports. One of the key benefits of AI-Rad Companion is that algorithms are frequently enhanced and new family extensions, with focus on more and more imaging modalities or body regions, are continuously being developed.

Or, as another example, Siemens Healthineers offers the AI-Pathway Companion, an AI-based software facilitating personalized and standardized diagnosis and treatment decisions along disease-specific care pathways.
Last but not least, Siemens Healthineers offers a comprehensive platform approach called “teamplay digital health platform.”

This platform serves as a central host for a broad range of transformative and AI-powered applications, including both Siemens Healthineers own-built healthcare performance management applications and offerings from curated partners.

The Shift from CAPEX: Adapting The Business Model

The challenge for Siemens Healthineers and their customers is that the traditional business model for medical equipment is predominantly transactional and rather CAPEX heavy.

But with a growing portfolio of AI-based and dynamically evolving offerings, the model needs to be adapted.
“Software-as-a-service for dynamic offerings that evolve with industry and user demands doesn’t work as a perpetual license, from a business perspective,” says Rahma Samow, Head of Siemens Healthineers Digital Health Global Sales, Marketing, and Digital Go-to-Market.

“We have worked very diligently to transform many parts of our portfolio to recurring revenue models. Because if you want to leverage AI as a key technology for digitalizing healthcare, you have to flexibly adapt, scale, and transform business models as your portfolio will obviously change with dynamic healthcare demands.”

Samow sums it up: “That’s the entire point of harnessing AI for the better of the patient – indefinite usage of soon-to-be outdated software doesn’t cut it anymore!”

So, for their new digital products, Siemens Healthineers implemented a subscription business model where customers paid for imaging and decision support services on a monthly basis or based on usage.

“This enables customers to receive continual updates, while limiting capital expenditures and giving them better planning accuracy and spending flexibility as their needs change over time,” Florian Rachny, responsible for Digital Business Processes at Siemens Healthineers explains.

Continues Samow, “Several of our AI-powered or AI-enabling solutions have been transformed into suitable business models and deployment scenarios in the last years, taking into account healthcare providers’ infrastructural demands and preferences, and combining flexibility and scalability with future readiness.”

“That’s the entire point of harnessing AI for the better of the patient – indefinite usage of soon-to-be outdated software doesn’t cut it anymore!”

Rahma Samow, Head of Siemens Healthineers Digital Health Global Sales, Marketing, and Digital Go-to-Market

Driving Customer Value

From the perspective of Siemens Healthineers, subscriptions mean new revenue streams that are more consistent over time.

But, more importantly, they drive the company to focus on the customer relationship and how to provide value – on a continuously evolving journey.

“To be honest, simply managing their machines from the cloud or even from an Edge solution is not seen as a huge value add by our customers. They often have self-developed solutions for that. The motivation for a hospital to move to the cloud has to come from tremendous value, which is what we provide with our AI-powered, cloud based augmented workflow solutions,” says Amardeep Singh, Siemens Healthineers Digital Health Go-to-Market for AI-Rad Companion.

And this new understanding of value is reflected in their pricing. Instead of simplistic cost-plus pricing, which in a competitive global manufacturing environment is always subject to margin squeeze, Siemens Healthcare now prices based on value. “Pricing for AI-Rad Companion is built around productivity savings. How much time can we actually save the radiology team?” Singh explains.

With a broad portfolio of AI-based offerings already partially FDA-cleared, Siemens Healthineers is looking to continuously expand their reach with other new offerings. In the process, the company has become more than just a provider of equipment. They’ve strengthened their role as a partner in patient care—and that’s very good for business.

The motivation for a hospital to move to the cloud has to come from tremendous value, which is what we provide with our AI-powered, cloud based augmented workflow solutions.

Amardeep Singh, Siemens Healthineers Digital Health Go-to-Market for AI-Rad Companion

* Note: several devices of AI-Rad Companion are planned and under development, not commercially available in all countries, and their future availability cannot be ensured.

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