Minnesota medtech titan Medtronic (NYSE:MDT) is making quick work of its new mission to expand its focus beyond medical devices. The company this week announced a new Hospital Solutions business and new contracts for catheterization lab management in Europe.
Medtronic dedicated a new corporate division to offering hospital services that aim to boost operational efficiency and help clinics bring "sustainable efficiencies and programs," with an initial focus on catheterization labs in Europe.
"The creation of this new business within Medtronic underscores our commitment to develop innovative services and solutions that create efficiencies, address costs, and improve patient access and outcomes for a broader set of hospital customers," CEO Omar Ishrak said in prepared remarks.
The Hospital Solutions business will work with healthcare providers to develop tools and models aimed at improving service delivery and expanding patient care pathways, increasing access to care as well as to new technologies. In pilot programs conducted last year, a Netherlands-based hospital saved an estimated $6 million (EUR4.5 million) in a single year, according to a company statement.
As part of those efforts, the device giant also formed a strategic alliance with NCG Medical SpA of Italy, which provides "specific expertise and an established track record managing outsourced cath labs in Italy." Medtronic now owns a 30% equity stake in NCG, with an agreement to expand beyond Italy, according to a press release.
The NCG deal prepares Medtronic to collect more cath lab contracts in Europe, adding to 2 long-term ‘tenders’ that the device maker already has in hand, according to the statement. The new deals, a 1st for Medtronic, came from the University Hospital of South Manchester NHS Trust and Imperial College Healthcare NHS Trust in London. Medtronic will manage their cath labs, providing technology, infrastructure, operations, optimization and marketing at 4 sites.
Together with the company’s recent $200 million acquisition of chronic disease management company Cardiocom, the moves signal Medtronic’s accelerated foray into a larger healthcare arena, a choice that some Wall Street analysts warned may also suggest “challenging times ahead” for the device industry.
Chanhassen, Minn.-based Cardiocom makes devices aimed at helping to manage chronic conditions like diabetes or heart disease. Fridley, Minn.-based Medtronic said the acquisition is its entree into the disease management sphere.
Buying Cardiocom also gives Medtronic a crack at a piece of the reducing readmissions pie. Last month Medicare slapped more than 2,000 care centers with some $227 million in fines for high readmission rates.
MDT shares were up 0.5% to $52.01 as of about 12:25 p.m. today.