August 17, 2007 / 9:36 PM / 10 years ago

Cisco sees growth as more hospitals go high-tech

SAN JOSE, California (Reuters) - Cisco Systems Inc. (CSCO.O) is best known for selling routers and switches to telecoms companies, but its strongest sales growth these days comes from an area that seldom gets much attention: hospitals.

Cisco has sold routers and switches to hospitals and insurance companies for years, but in 2005 it created a business segment focusing on health care. Since then, it has launched a wide range of equipment designed for hospitals.

“It’s growing at a pace that is faster than Cisco overall, and the industry overall. We have doubled our sales over the last two years,” Jeffrey Rideout, head of Cisco’s health care practice, told Reuters in an interview.

While the company does not disclose financial results from the segment, Rideout said annual revenue is well over a billion dollars, out of Cisco’s overall sales of about $35 billion.

He forecast more growth ahead as hospitals install wireless technology and Cisco teams up with medical device makers to ensure more data can be shared on Internet protocol networks.

Networks can help cut administration costs and improve productivity, and with the population aging in much of the industrial world, hospitals had much to gain, Rideout said.

In addition to standard network equipment, Cisco offers hospitals gadgets to deliver and track health records electronically, and its Internet-based system helps hospitals monitor medical equipment and respond quickly to nurse calls.

Cisco also incorporates its video-conference technology into Health Presence, a real-time conferencing system that connects patients and doctors, as well as interpreters. Along with more electronic data sharing, that can improve care and offer better access to people in remote areas, Rideout said.

Trained as a doctor of internal medicine, Rideout was formerly chief medical officer and senior vice president for nonprofit insurer Blue Shield of California.

After serving on various advisory boards exploring ways of improving health care, Rideout said he thought Cisco, one of Silicon Valley’s most respected technology companies, offered the medical industry an “interesting vehicle for change”.

    CEO John Chambers, raised by doctors in West Virginia, calls health care one of his chief concerns, saying he knows every serious illness among his employees and their families.

    “Often, when my parents were on duty I spent the night in the hospital, and so I understand how the hospital works, both the efficiencies and the inefficiencies,” he said.

    While Nortel Networks Corp NT.TO and Juniper Networks Inc JNPR.O also sell to healthcare companies, Rideout said Cisco’s advantage was scale and experience of adding partners.

    Cisco has partnered with GE Healthcare (GE.N). Rideout said such partnerships are crucial to ensuring data from devices such as blood pressure readers and X-ray machines are digitally formatted and deliverable over an Internet protocol network.

    Cisco plans to tie up with even more device makers. “What we don’t want to be is a medical device company or a medical advice company,” Rideout said. “But we want to help it work.”

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