Medtronic Inc. (NYSE:MDT) is combining its cardiac and vascular groups’ sales forces into a single cross-divisional organization.
Fridley, Minn.-based medical device giant said the changes are not about cost savings, but to address the new ways that hospitals purchase medical devices.
The new strategy is a response to increased involvement by hospital administrators making purchasing decisions across a spectrum of hospital care in the age of health care reform, according to the company.
"This is our response to a rise of administrators increasingly becoming more influential in the decision-making process," Medtronic spokesman Christopher Garland told MassDevice.
"Typically in the past, and we’ve seen this particularly in the medical device industry, the sole decision maker when it came to making device purchases, the physician or clinician was making those purchases. That is still largely the case today, but what we’re seeing now is that administrators are making decisions on devices, and they are making those decisions on the full spectrum of care," he said.
Garland stated that the new combined sales structure has "absolutely no relation" to Medtronic’s move away from group purchasing organizations.
Medtronic made headlines in February when it canceled several contracts for its cardiovascular and orthopedic products with the GPO Novation LLC — deals worth an estimated $2 billion per year. A few weeks later the company spiked a deal with another GPO, Premier Inc., for some of its spine products. After the Premier deal ended, Garland said in a March email to MassDevice that the decisions to end both deals were made because the company felt it would do better negotiating contracts directly with hospitals.
Medtronic is not changing its stance on group purchasing organizations, despite the contract cancellations, according to Medtronic CFO Gary Ellis.
“There’s a lot of speculation around here that a strategic change is going on,” Ellis told analysts at the Barclay’s Capital Investors Conference in Miami in March. “That is not the case.”
GPOs play a significant role in the delivery of healthcare, Ellis noted, and they’re beneficial in streamlining the process of selling into hospital systems.
“We intend to maintain our relationships with GPOs that are providing a benefit,” he said.
The new cardiac and vascular sales organization takes effect May 1. The cardiac rhythm disease management business’ former vice president of sales, David Roberts, will assume leadership the 2,700-person organization as national vice president, cardiac and vascular group sales.
The new sales structure will include leadership from cardiac rhythm disease management, structural heart, endovascular innovations and peripheral, coronary and renal denervation groups. Medtronic plans to divest its physio-control group.
Material from MedCity News was used in this report.