After three years in the bundled joint replacement business, a federal policy shift is prompting Medtronic (NYSE:MDT) to put its Responsive Orthopedics business on the auction block.

The May 2016 acquisition of Minneapolis-based Responsive for an undisclosed amount put Medtronic in line for a bundled joint replacement program piloted by the Centers for Medicare & Medicaid Services.

The 5-year “Comprehensive Care for Joint Replacement” program originally involved more than 800 hospitals in 75 geographic areas, covering the procedures from hospital admission to 90 days after discharge. Soon after the Responsive buyout, Fridley, Minn.-based Medtronic rolled out a new Orthopedic Solutions business expressly to take advantage of the CCJR program.

But CMS made the program voluntary in November 2017, prompting participating hospitals to opt out. That shrinking market, combined with the competitive pricing in the joint replacement market, pushed Medtronic into abandoning the field.

“In February 2019, Medtronic announced that it was withdrawing from the orthopedic implant market. This decision was made in response to shifting market dynamics and to focus the business for future growth,” a spokeswoman told MassDevice.com via email. “Since the company acquired Responsive Orthopedics in 2016, federal guidelines for orthopedic joint replacement have shifted and implant pricing has become highly competitive, making it difficult for Medtronic to offer a disruptive solution. The Responsive Orthopedic knee system remains a high-quality, effective implant that has performed well for the patients who received it. Medtronic is focused on superior product quality, and our orthopedic implants are no exception.”

The company did not respond to more specific questions about the Responsive Orthopedics sale.

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