GE Healthcare imaging unit to cut costs, jobs

By Debra Sherman

CHICAGO (Reuters) - General Electric Co (GE.N)'s diagnostic unit, which makes imaging equipment such as magnetic resonance imaging known as MRIs, will reduce costs and cut jobs.

In an interview, Mark Vachon, President and Chief Executive of GE Healthcare Global Diagnostic Imaging business, said he expects sales of big-ticket imaging equipment to be down "in the mid-single digits" percentage points in the United States in 2009 compared with 2008.

"There's no question that, given this market, we're going to get much tighter on costs," Vachon said, adding that spending cuts will include job reductions.

He declined to quantify reductions and gave no time frame.

The business unit, based in Waukesha, Wisconsin, employs roughly 7,000 people. Its technologies include X-ray, digital mammography, computed tomography known as CT, magnetic resonance and molecular imaging.

Sales in the United States have been depressed as cash- strapped hospitals clamp down on capital expenditures. The price tag for a MRI or a CT scanner might range between $500,000 and $2 million.

A report published last month by the American Hospital Association said 45 percent of U.S. hospitals surveyed said they were delaying purchases of clinical technology or equipment, and 39 percent were putting off investments in new information technology.

"Yes, I'm anxious about the U.S. market," he said, but noted that losses in the United States are mitigated by stronger sales in other markets.

GE Healthcare's diagnostic unit generates more than half of its revenue outside the United States.

Sales in China, for example, would likely be up 5 percent to 10 percent in 2009, while sales in Eastern Europe and Russia would probably see double-digit sales growth rates, said Vachon, who was in Chicago attending a meeting of the Radiological Society of North America. Western Europe would likely generate sales growth in the lower single digits next year, while Japan should be stable in 2009, he added.

Vachon said revenue generated by its service unit had also mitigated the impact of sales losses in the United States.

He said 2009 will be "a challenging environment for all industries, healthcare included."

However, he expects conditions to improve in 2010.

"The first (sector) out of this (recession) will probably be healthcare. There will be pent up demand that must be met," he added, noting the favorable demographics of an aging population.

(Editing by Andre Grenon)