Arduini provides introductory remarks at GE HealthCare’s Global Leadership Team meeting in July 2023.
Call it a homecoming: In 2022, Peter J. Arduini ’95 MBA stepped into the role of president and CEO of GE HealthCare, returning to the company where he once cut his teeth as a regional sales manager.
The timing couldn’t have been more critical for GE HealthCare. Its parent company, General Electric, had announced in 2021 that it would spin off its major business units to simplify its focus. It would establish GE HealthCare and its aviation (GE Aerospace) and energy businesses (GE Vernova) as stand-alone companies. To guide that high stakes transformation, GE HealthCare turned to one of its own.
“I’ve always been drawn by purpose and opportunities,” Arduini told a packed house of Kellogg School of Management students during a visit to the Global Hub last fall for “Perspectives on the Business of Healthcare” hosted by Healthcare at Kellogg. He had spent 15 years at the company earlier in his career, learning to be a leader while working his way up to VP. When he got the call to take the CEO role, he had been away for 17 years at medical equipment manufacturers Baxter International and Integra LifeSciences.
So, he says, he listened to some wise advice. “My wife of 32 years, Kim, said, ‘This is what you’ve been preparing for your whole career,’” Arduini recalls today. “As a company, we’ve got a long journey in front of us. But it’s a special place, particularly if you grew up there like I did.”
Today, GE HealthCare is going strong. It debuted on the Nasdaq in January 2023 and has beat analysts’ expectations for its first year of earnings as an independent company. Arduini himself has been recognized by Modern Healthcare as one of its “100 Most Influential People” in the industry, and he now chairs the board of directors at AdvaMed, a U.S.-based global trade organization for the medical technology industry.
At Kellogg, he sat down with Northwestern Life Trustee and Kellogg Global Advisory Board chair Jim McNerney, former Boeing CEO and also a GE alum, for a wide-ranging chat. Their conversation delved into the details of GE’s history-making spinoff, the challenges of crafting a new organizational culture and the massive technological advances poised to reshape healthcare. An edited transcript of their conversation follows.
JIM MCNERNEY: Your growth plan is built around artificial intelligence, data and the cloud. You have more AI-enabled devices cleared or approved by the FDA than any other company in your industry, and you’re transforming into an information systems company built on this base of medical imaging technology. That’s got to be a huge challenge.
PETER ARDUINI: If you want to get into an industry where you’re going to see more change in the next 10 years than the last 100, healthcare is the place you want to be. There’s this idea that we can take all this data that’s not currently being used and turn it into insights. That can make the difference between whether you live or not, or whether you live 20 years longer.
To put it in perspective, the Library of Congress in Washington contains about 30 petabytes of data. One hospital in the U.S. has about 50 petabytes of data, and a lot of that is 4K or 8K imaging, most of which never gets looked at again. And then you think about the data on your genomics or pathology or blood pressure — they’re all in different systems.
The challenge in the next 10 years will be, how can we pull all that data together onto one pane of glass so that your clinician has a longitudinal view of what’s going on with you? And then, how can we use foundation models from artificial intelligence to frame up the next course of action?
Our focus is on delivering personalized care — it’s the basic concept that a drug or intervention that may save my life may actually harm you. So how do we find out what is uniquely different about us or how we react biologically to certain pharmaceuticals, therapies and approaches? And how do you personalize to that? The answer is in all our data. GE HealthCare touches so many different institutions and generates so much of that data, and our focus is on that digital transformation. We call it D3 for shorthand — a laser focus on smart devices and drugs, disease states and digital solutions to enable precision care.
MCNERNEY: Let’s talk about the spinoff itself, which was a tremendous leadership challenge. Just prior to returning to GE HealthCare, you spent 10 years leading a mid-cap medtech company. Today, you find yourself guiding the spinoff of a huge division of a conglomerate, where the culture can be really different. How did you approach that?
ARDUINI: First, it was bringing together a group with the right capabilities. But an even bigger part is what we talk about in business school: What is our vision and our purpose? How does that align to our strategy? For me, strategy is less about what we’re going to do and a lot more about what we’re not going to do, and how you think about those things.
I’m a big believer in Peter Drucker’s famous comment that “culture eats strategy for breakfast.” We spend a lot of time talking about the kind of culture we want. What are some of the historic GE characteristics we want to keep and grow, and what are some of the new things we want to bring in?
I’m a big believer in Peter Drucker’s famous comment that “culture eats strategy for breakfast.” We spend a lot of time talking about the kind of culture we want.
MCNERNEY: Take us inside some of those conversations. What was that like in the moment?
ARDUINI: We didn’t have much time, and I remember our team sitting in a hotel somewhere in Wisconsin between Madison and Milwaukee on a cold day having these discussions. We had laid out a purpose, a bold one for us, that talked about “creating a world where healthcare has no limits.”
You had folks at the table wondering if that was too much, but we needed to rally around a vision and purpose that we could build the company on. By staking claim to that purpose, we’re saying that we all know there are all kinds of limits in healthcare, but we’re going to partner with customers and help build and enable the ecosystem. It’s much broader than just saying, “We’re a top device company,” or “We’re going to be the best imaging company.” We’re making a bolder statement that we want to focus on some of the biggest challenges and play a significant role in solving them. That has a lot to do with data and where we’re heading with integrated analytics and informatics.
MCNERNEY: So the future for you is an improvement in imaging technology and the role of software and AI and the cloud as a facilitator. Is that where this big improvement in medical insight is going to come from?
ARDUINI: Yes. It’s not just about generating data points. It’s about taking all that data and finding an answer, and that’s what we’re trying to do.
Take, for example, our wireless ultrasound device. It’s a self-contained unit about the size of your hand, and it sends images to your smartphone or tablet. It has as much power as our best system did eight years ago, which took up a whole cart.
But the real game changer is the fact that we bought a company called Caption Health that uses AI to assist in taking cardiac ultrasound scans — a real art that takes someone a lot of training to get right. What if AI could teach providers who aren’t experts in ultrasound how to position the device to get the right image? It could verify what they’re seeing against a database in milliseconds to tell them when to take the picture.
In the future, if authorized, you could imagine a provider in a remote area of the world could put a device like this in a backpack and use it to check in on people who don’t have access to cardiac care nearby. We envision primary care physicians across the United States using a handheld ultrasound unit during an exam as easily as they use a stethoscope. Imagine how much more early evaluation screening you could do with this device.
Arduini on the floor of a GE HealthCare manufacturing and production facility in Waukesha, Wisconsin.
MCNERNEY: To execute this strategy, I imagine you’ll have to hire the right kind of data scientists and AI experts, but also generalists who are attracted to the mission and the opportunity. What kind of talent are you looking for?
ARDUINI: Continuous learners. Even during this conversation, listeners have probably encountered an unfamiliar term or concept. Be the person who looks it up. Be the person who grows. Most of us won’t become AI experts, but we need to know what this technology means from a socioeconomic standpoint and what its implications are. This stuff is changing fast, and you’ve got to be curious about it.
We’re also looking for people who can create a vision and energize the people around them — that’s everything. There are two fundamental things everybody needs to be really good at. One is how you manage any kind of project. If we throw something at you, how do you assemble a team and make it work? Two is how you think about solving a problem and get down to the root cause.
If you’re someone who can bring people together, frame up how to attack different things and then orchestrate a group to solve problems as they come up, great things can happen no matter what background you have.
MCNERNEY: Shifting gears, what lies in front of you? Where are you in your journey as a CEO? Where are you making progress or falling short?
ARDUINI: Being able to deliver on what we promised to investors — and in many cases, new investors — was an important part, and we’ve been able to do that. We’ve raised guidance twice now, and we’ve been able to deliver on our numbers.
We’ve been successful in raising our EBIT, driving cash flow conversion about 85% plus. We’ve grown our revenues this year 6% to 8%, and we’re building our future capabilities.
Another important part for me is innovation. Innovation is like growing a tree. You can’t wake up one day and say, “Let’s grab an innovation — let me pull the apple off the tree.” No, you had to think years ago about planting the seeds and nurturing them until they could bear fruit. We’re thinking about how to get costs out of other areas and put them into innovation now, knowing we’re not going to see that fruit until late 2024 or 2025.
We’re on track with a lot more work to do. There is no greater cause right now than trying to evolve things that can affect everyone’s life outcome. And we have a great opportunity to do it.
A few months after this conversation
On Feb. 6, 2024, GE HealthCare reported earnings for its first year as an independent company, beating analysts’ expectations. Arduini said, “This strong financial performance is a testament to our dedicated team and successful execution of our precision care strategy. We’ve made significant strides, including investing $1 billion in R&D for future growth, helping drive more than 40 innovations in 2023. We bolstered our market position with strategic acquisitions, while at the same time paying down $1 billion in debt, setting a solid foundation for continued growth.”
Creating the culture
When Peter Arduini ’95 MBA took the helm at GE HealthCare, he prioritized conversations about what the new company’s organizational culture should be. Through a series of deep discussions, he and his leadership team landed on these five principles:
- Delivering the future of healthcare by finding new ways to deliver value for our people, patients and providers through a growth mindset and continuous learning.
- Championing servant leadership, where top executives see themselves as being at “the bottom of the pyramid,” helping the team succeed.
- Leading with a lean mindset that urges colleagues to approach each workday wanting to get better and keep learning.
- Empowering an entrepreneurial mindset that empowers colleagues to make their own decisions and act with speed.
- Winning together and having fun while fostering diverse, inclusive teams across a company with global reach.