GE Reorganizes Units, Tabs Hogan to Run Healthcare

General Electric, which in April 2004 closed the approximately $10 billlion acquisition of Amersham to create the new GE Healthcare business unit, yesterday said that Joe Hogan has been named CEO and chairman of the business segment as part of a restructuring of the company. Hogan will run GE Healthcare in 2006 on the retirement of William Castell, who was the chairman of Amersham and is now vice chairman of GE.

While the leadership of the GE Healthcare unit is shifting, the organization thus far will remain essentially unchanged. It will be one of six GE business segments, down from 11 previous to yesterday's reorganization.

With Joe Hogan in the executive suite at Chalfont St. Giles, UK – GE's only business unit headquartered outside the US – leadership returns to someone well-versed in the “GE Way.”

Hogan, 42, previously was president and CEO of GE Medical Systems of Waukesha, Wis., the unit that was merged with Amersham to form the $14-billion-a-year new business unit that provides medical imaging, services and information technology as well as diagnostic pharmaceuticals and drug-discovery technology.

Notably, Jeff Immelt was head of GE Medical Systems from 1997 to 2000 before being named to replace Jack Welch as GE's chairman and CEO. By market capitalization, GE is the second largest company in the world, behind Exxon Mobile.

GE's purchase of Amersham was a stunning move and was accompanied by PR that all but proclaimed the dawning of a new age in medical technology, and the opening of a new pathway to the nirvana of personalized medicine. Now, as the company prepares to report its Q2 financials in July, the first quarter that will include year-over-year results for the combined business, GE is promising that the restructuring will allow more transparency for investors to judge its operations. That would be of great interest to anyone who has sat through a conference call with 11 business units reporting results from operations ranging from jet engines, to plastics, to appliances, to PET scanners.

Castell was in many ways the champion of the integrated business unit’s future in the uncharted path of personalized medicine. According to an article earlier this year in the Sunday Times of London, Castell, in evangelizing for the unit, has shown his fellow GE executives PET scans of his brain, and has shown reporters ultrasounds that reveal he has early-stage heart disease, which he is “managing.” Hogan, likely, will just have to show results – like double-digit revenue growth and profitability.

The Financial Times said yesterday:

GE insists the departure of Sir William Castell, recently appointed to run the division, was always intended once his former company, Amersham, was integrated into the new parent. Nevertheless, its performance will be closely watched to see if Sir William's legacy is as visionary as Mr. Immelt once claimed it to be.