G.E. Chief Sees India Helping Cut Costs of U.S. Health Care

India will play a significant role in reducing health care costs in the United States as the Asian nation’s health care market expands, General Electric’s chief executive, Jeffrey R. Immelt, predicted here on Friday.
The Indian health care industry is “on the verge of substantial growth,” Mr. Immelt said. Health care products and services developed cheaply here will be exported to Western markets, cutting prices there, he said.

G.E.’s health care business includes diagnostic equipment and services, pharmaceutical research and development and patient monitoring.

The Indian public health care system has historically been overburdened and underfunded, particularly in rural areas. As income levels rise, private clinics and labs are springing up, and governments in some Indian states have begun to increase overall spending on health care.

The health care industry in India is expected to more than double in size from 2008 to 2012, to $75 billion, according to Technopak Advisors, a consulting company. In 2007, Americans spent $2.26 trillion on health care, according to the government.

Mr. Immelt’s comments were made at a news conference related to the restructuring of G.E.’s health care business in India. The company said it was aiming to simplify operations, allowing it to take advantage of the growing market.

GE Healthcare, based in Chalfont St. Giles, England, employs 46,000 people in 100 countries around the world. Revenue from the health care division was $17.3 billion in 2008, less than 10 percent of G.E.’s total.

Many analysts and health care executives say they share Mr. Immelt’s belief that innovations from emerging markets, particularly India, could lead to big changes in the United States health care system. Already, American health care companies are cutting costs by outsourcing services to India like reading X-rays or scheduling nursing visits.

India, rather than China, will be the source for new models and ideas about improving and lowering the cost of American health care because the health care industry in the United States has more in common with India than with China, Mr. Immelt said.

G.E. employs more than 14,500 people in India, in divisions from research and development to back-office functions. But to date, just a tiny fraction the company’s revenue comes from India, about $3 billion of a total $182.5 billion in 2008.

G.E. said it was selling three of its health care units in India — Medical Systems India, Life Sciences and Medical Diagnostics — to its venture with Wipro, the third-largest Indian information technology company.

The 19-year-old venture, Wipro GE Healthcare, already distributes 85 percent of GE Heathcare’s products and services in India, which include ultrasound scanners, fetal monitors and cardiology monitors, as well as the software and servicing associated with those machines.

The restructuring will allow G.E.’s units to “develop products even faster,” Mr. Immelt said, by providing “seamless” operations.