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Medtronic is Making the Most of Value-Based Care Pixabay/QUINCEMEDIA

Medtronic is Making the Most of Value-Based Care

CEO Omar Ishrak said Medtronic's value-based care programs are beginning to pay off.

Medical device companies of all sizes have embraced value-based healthcare in recent years, and one of the industry's top companies is now beginning to see its value-based care programs pay off.

"I know I have spoken a lot about value-based healthcare, but I'm particularly pleased to see this translate into real numbers, which have real differentiating value for Medtronic," CEO Omar Ishrak said during Medtronic's third-quarter earnings call Tuesday, according to Seeking Alpha transcripts.

Ishrak said the company's Tyrx absorbable antibacterial envelope is just one example of innovation being linked directly to an outcome when the company built a business model around it. The mesh device is used to hold a pacemaker and ICD in a stable environment and release antimicrobial agents over a period of seven days when the chance of infection related to surgery is especially high.Michael Coyle, president of Medtronic's cardiac and vascular group, said more than 1,000 hospitals are now participating in the Tyrx program, which is designed to tie patient outcomes to the cost.

"Tyrx is not separately reimbursed and so by doing this we have been able to create a guarantee that basically is very appealing to accounts who know that they will obviously have a patient who is significantly impacted by an infection," Coyle said. "They will lose money at the provider level, at the hospital level, because of that redo procedure that's required and of course the payer is now out two separate procedures for payments."

Coyle said the program is broadly seen as a "win, win, win," for the patient, the hospital, and the company.

"But it also allowed us, by being able to see the appeal of this approach, to then apply it to numerous other parts of our business, including reductions in heart failure re-hospitalization with the adaptive CRT, a feature of our [cardiac resynchronization therapy] devices," Coyle said.

He said another example of a value-based care program at Medtronic is the company's Smart Shot Performance Guarantee program, which basically pays when patients come back with inappropriate shots from an implantable cardioverter defibrillator. 

Coyle said the company also has a drug-coated balloon reintervention prevention program that ties the cost of care to patient outcomes. 

"And then our cryoablation business, basically we have a program that pays when patients come back with either repeat hospitalizations for [atrial fibrillation], or for repeat procedures with the ablation," he said.

Most of these programs are only a quarter or two old, Coyle said, and the company has more than $650 million of revenue, mostly in the United States, tied to these programs.

"We are increasingly partnering with additional stakeholders and the healthcare value chain including payers, providers, and other interested organizations to lead the change for FIFA service models to value-based programs," Ishrak said.

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