Boston Scientific CEO says collaborative approach with hospitals needed in product development

Boston Scientific CEO Michael Mahoney

Boston Scientific ($BSX) CEO Michael Mahoney described the challenge of continuing to innovate amid the shifting reimbursement sands at the JP Morgan Healthcare Conference in San Francisco.

"Our market today is evolving in the direction of value-based healthcare, as many of you know.Yet many of our markets, our customers continue to be reimbursed today in a fee-for-service world. So this dynamic that we face requires organizational agility and a focus on innovation for multiple dimensions," he said.

Increasingly, those innovations focus on helping not just the patient, but the hospitals, who are also facing the reimbursement squeeze, and are increasingly being judged by the Centers for Medicare & Medicaid Services based on metrics such as the rate of readmissions and hospital acquired infections.

"Our focus on value allows Boston Scientific to bring new technology to patients while helping hospitals address their budget constraints by improving outcome, shortening length of stays and reducing readmission rates.This collaborative approach with a focus on clinical outcomes as well as cost is important to all of our stakeholders. And we're really strengthening this capability across the company today," Mahoney said.

"And as an example, we're working to help patients and hospitals manage the heart failure readmissions through our CRM monitoring capabilities, a clinically proven differentiated battery longevity, which helps reduce the costly burden of ICD change-outs and a high risk of infection. We're also extending our focus on heart failure management on new partnerships like one we recently announced with Optum Healthcare," he continued.

Mahoney said the company's breadth of offerings give it staying power, saying, "As hospitals continue to reduce the number of suppliers they partner with, we believe BSC earns an advantage in this environment. We offer a tiered DES stent offering, including the U.S.-market-leading Promus Premier drug-eluting stent and the first-of-its-kind Synergy bioabsorbable stent, which we expect to bring in the market by the end of 2015."

However, during the question and answer session, company officials clarified that the "bundling" of disparate devices is rare during sale and price negotiations with hospitals.

Mahoney touted the CE-marked but not FDA-approved Lotus transaortic valve replacement (TAVR), saying it has the lowest rate of paravalvular leakage, as well as the S-ICD pacemaker, which is the only device of its kind that does not contact the heart. The second-generation Emblem S-ICD is slated for launch this year, he said.

In addition, company officials said during the Q&A session that the company has not declared a U.S. strategy for its Ranger drug-coated angioplasty balloon, but "may well do so" during the upcoming investor day in May.

- listen to the presentation (reg. req.)

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