Medtronic has just bought a Dutch clinic and research center focused on diabetes management. Can the company still be called just a device maker?
A fundamental transformation is underway at Medtronic.
Terms like continuum of care, disease management, population management and integrated care that would have been absent from its lexicon even five years ago are popping up in presentations by its CEO, in its communication to investors and analysts and yes, in rationales for doing business.
Most recently this was observed in its acquisition of a Dutch diabetes clinic and research center for an undisclosed amount. Medtronic announced Thursday that with this purchase of Diabeter, the Irish company is making a debut into the integrated diabetes care model.
Payer-provider integration has ramped up as a result of the Affordable Care Act, and here is possibly the very first example of device maker-provider integration in the United States.
But what makes this interesting is that Medtronic is bringing doctors and clinicians into its fold not helter skelter but specifically connected to a disease, which it wants to manage from end to end. Or at least after patients are diagnosed.
Diabetes is of course an expensive disease to treat with a whole litany of complications and comorbities. In 2012, the cost of treating diabetes jumped 41% to $245 billion from $174 billion in 2007.
Netherlands-based Diabeter is in the business of helping children and adults do a better job managing this disease by leveraging information technology and devices.
So Medtronic is betting that future success will depend on caring for people across a disease continuum - in this case, it wants to do more than just sell the pumps and sensors to patients via physicians but also provide the assistance need in actively managing diabetes.
"This acquisition marks Medtronic's first entry into a diabetes integrated care model approach and signifies that Medtronic Diabetes is more than pumps and sensors - we are a holistic diabetes management company focused on making a real difference in outcomes and cost," says Hooman Hakami, executive vice president and president of the Diabetes Group at Medtronic, in a news release.
Hakami notes that Diabeter's 36 people at 4 locations "practices personalized medicine making use of specially developed technologies, such as the Diabeter Dashboard, an electronic system that links patient and physician to encourage self-management with diabetes care team support."
The methodology has led to "significant reductions" in HbA1c levels, which measures the average blood glucose in the previous two to three months. Now with Medtronic's help, the goal is to apply the methodology broadly to other parts of the world, and bend the cost curve of a rapacious disease.
The same push into disease management is occurring through another acquisition - Cardiocom. There, Medtronic is aiming to remotely monitor heart failure and other chronic disease patients by leveraging technology and a nurse call center.
Medtronic then is trying to provide a hardware-driven, data-driven and people-driven solution to intractable problems. Can the company still be called a device maker?
In 2013, when Medtronic purchased Cardiocom, it made an attempt to recast its operating philosophy.
"We are determined to transform Medtronic from being a primarily device provider today into the premier global medical technology solutions partner of tomorrow," said Omar Ishrak, Medtronic's CEO in a conference call with analysts.
The Diabeter acquisition firmly entrenches Medtronic on this path.
However, I am still looking for a new phrase to describe the new Medtronic. Calling it the "premier global medical technology solutions partner" is slightly premature given that Medtronic needs to prove that this services and disease management focus is delivering results both to healthcare and its own bottom line.
And from a pure journalistic perspective, it's a trifle too wordy. Suggestions, by the way, are entirely welcome.