Medtronic (NYSE:MDT) bought Cardiocom LLC for $200 million in cash in a bid to get into the disease management business.
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. Earlier this month Medicare slapped more than 2,000 care centers with some $227 million in fines for high readmission rates. Medtronic’s initial focus with Cardiocom will be heart disease, according to a press release.
"With our first integration of this technology focused on heart failure, we will have the unique opportunity to combine our leading diagnostics, therapies and patient management solutions. This combination will strengthen our ability to partner with providers and payers to help them reduce cost and improve quality," president & CEO Omar Ishrak said in prepared remarks.
"With the integration of Cardiocom, our portfolio of products and services will span the continuum of care for the management of heart failure, which affects an estimated 7.5 million people in the U.S. and is a significant burden to the healthcare system – representing 1.1 million hospital visits per year in the U.S. at a cost of $39 billion each year. We seek to reduce that burden on hospitals, physicians, payers and patients," added U.S. president Mike Genau.
Medtronic said it expects the effect of the buyout to be neutral to fiscal 2014 earnings.
Genau told the Wall Street Journal, which was 1st to report the Cardiocom deal, that providing value has become as important as a device’s clinical benefits.
"In prior years, most companies focused much more on the clinical value side," Genau told the newspaper. "While that’s important, there’s more and more focus on, ‘show me how you take costs out of the system.’
"Our focus is really around reducing the readmissions," Genau added, noting that the company is also looking at diabetes and considering other buyouts to complement its Cardiocom operation, according to the Journal.
