Qmed Staff

September 3, 2013

3 Min Read
Medtronic's Cardiocom Acquisition Reveals Growing Telemedicine Trend

In recent months, Medtronic grabbed newspaper headlines with its acquisition of Cardiocom, a patient monitoring and disease management company. While the company's latest $200 million dollar acquisition helps give Medtronic a foothold in the patient monitoring market, one analyst believes that other companies will soon follow in Medtronic's footsteps.

According to Paul Teitelbaum, a managing director and analyst at Mesirow Financial, Medtronic's move signals a great migration toward the world of home healthcare, telemedicine and remote health monitoring systems.

As medical device companies face pricing pressures from overseas markets, they also face higher levels of commoditization. Medical device companies in emerging BRIC markets can often provide prices that are lower than their globalized brethren. On top of this, lower reimbursement from Medicare, Medicaid, and other government-subsidized systems have cut into the bottom line for many medical device companies.

In response to these issues, there are several significant trends that are emerging in the world of medical devices.

With Medtronic's latest acquisition, the home health sector appears poised for significant growth. In part, the rise of accountable care organizations (ACOs) could spur development in this sector. With the Affordable Care Act, hospitals and other healthcare facilities are penalized for high patient readmissions. Based on this, healthcare organizations are looking for effective ways to monitor patients' biometrics from their homes. By keeping a tighter rein on a patient's health, hospitals and other healthcare facilities can reduce costs and minimize ACA-related penalties."Providers and payers have an increasing level of interest in having healthcare delivered in the home," notes Teitelbaum. "It's a lower cost setting, and patients with chronic illnesses can be monitored in the home to prevent re-hospitalizations. It's the hospital and re-hospitalizations that are costly and driving up the cost of the healthcare system."

With this growth, monitoring and diagnostic devices will capture a larger market share. In particular, Teitelbaum believes that this emphasis will place additional scrutiny on the utilization of high-cost implantable medical devices. In particular, Teitelbaum singles out total knee replacements as a high-cost device that may receive additional scrutiny.

In addition, the future may hold higher potential for ambulatory surgical centers (ASCs) instead of hospitals. Since ambulatory surgical centers have cost advantages over larger healthcare facilities, utilization of these centers could be poised to increase.

With higher demand for ASCs, the demand for minimally invasive devices could be on the rise. As of now, many GI and orthopedic procedures already make use of minimally invasive tools and techniques. With this push, many healthcare providers will be looking for ways to utilize less invasive solutions and smaller incisions.

On a final note, Teitelbaum believes that the extremities market could see significant growth in coming years. In particular, he believes that devices for large joints and the spine could see price compression.

"If all you do is spine, then you are in trouble," he notes. "Spine is a tough space, even if you stick to cutting costs and innovating, you are potentially exposed to the risk of what happens in that whole marketplace."

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like