Bowing to government antitrust concerns, General Electric Co. has agreed to settle two separate cases with the Justice Department over the servicing of medical equipment.
The case has major implications for providers that have attempted to compete with GE in the field, department officials said.
Joel Klein, assistant attorney general in charge of antitrust, said the settlements "will restore competition in medical equipment service markets, reduce the prices paid by hospitals and other healthcare providers, and help to lower healthcare costs for all consumers."
The settlements should help shore up the position of independent service organizations-especially those started by hospitals-as they attempt to compete with GE, the largest manufacturer and servicer of diagnostic imaging equipment.
The first settlement concerns a 1996 civil suit the Justice Department brought against GE in federal court in Missoula, Mont., alleging the company's software licenses prevented hospitals from competing with GE to fix medical equipment.
Under the settlement, GE cannot bar hospitals from performing third-party service as a condition for licensing the service software. The Justice Department said GE had imposed the licensing restriction on more than 500 hospitals. Under the settlement, however, GE still may prohibit a hospital service organization from using the GE software outside its own institution.
There were no findings or admissions of misconduct by GE, and the Fairfield, Conn.-based company is not liable for any damages, penalties or payments. Since 1996 GE has been essentially living by the terms of the settlement, said company spokesman Charles Young. He said the settlement preserved GE's control over its intellectual property and assured that other parties would not be able to use the company's own technology against it.
Hospitals applauded the service software settlement.
Large networks of affiliated hospitals were hardest hit by GE's previous licensing practice. Effectively, a biomedical engineering department could license the GE service software for use in its home hospital only if it agreed to forgo all outside service activities.
Several years ago St. Vincent Hospitals and Health Services in Indianapolis said it allowed its service software licensing agreements with GE to lapse rather than agree to the company's contract terms.
"We had some software licenses years ago and didn't renew them because of the (no-compete) clauses," said Greg Ranger, director of clinical engineering at St. Vincent. That was because the health system had decided to form an independent service organization, which now employs 32 service technicians, to aid affiliated hospitals, physician practices and surgery centers. But the price of independence was dropping the GE trouble-shooting software that made it easier to fix in-house equipment.
"Now with this new finding, we will have the choice to buy that GE software if we wish" and do the servicing work, Ranger said.
The second settlement requires GE to divest similar service software developed by InnoServ Technologies within six months of buying the Arlington, Texas-based independent medical equipment service company.
By clearing the legal decks, GE can complete its purchase of InnoServ for about $16 million. Announced in May, the InnoServ deal is expected to close in 45 to 60 days, GE said.