Medtronic bags telehealth biz for $200M

Cardiocom markets telehealth products for disease management, including the Commander Flex system.--Courtesy of Cardiocom

Medtronic ($MDT) has traded $200 million for Cardiocom, a maker of disease-management technology, as the medical device giant pries its way into the high-growth market for products that can reduce costs for healthcare providers.

In an all-cash deal, Medtronic gets Cardiocom's fleet of remote monitoring devices and telehealth platforms, technologies designed to keep tabs on patients' conditions and report real-time data back to physicians and nurses. At-home monitoring is a proven method of reducing the rates of hospital readmission, Medtronic said, and that translates to savings for payers, providers and governments.

"With broad healthcare reform initiatives focused on growing economic challenges, healthcare systems in every region of the world are striving to continuously improve outcomes, increase access, save cost and improve the efficiency of healthcare delivery," CEO Omar Ishrak said in a statement. "The acquisition of Cardiocom is one step we are taking toward providing a combination of products and solutions that can help address those challenges."

Medtronic CEO Omar Ishrak

While Cardiocom has products for diabetes and various cardiovascular diseases, Medtronic will first put its tech to use in heart failure. Managing the disease accounts for 1.1 million hospital visits and costs $39 billion each year in the U.S. alone, Medtronic Senior Vice President Mike Genau said, and the company believes its newly acquired technology can help reduce that burden.

And thanks to new laws that penalize hospitals for repeat admissions, Medtronic shouldn't have much trouble convincing customers of Cardiocom's value. As The Wall Street Journal points out, a new cost-cutting penalty program targets heart failure as among the largest contributors to waste in the healthcare system, threatening hospitals that post high rates of readmission with up to a 2% reduction in Medicare payments this year.

For Medtronic, a company with a lot of skin in the high-cost, shrinking-demand game of cardiac rhythm management devices, buying into patient monitoring is a bid for diversification, giving the company a line on patients who don't yet need implants. Last quarter, Medtronic's CRM business grew 3% to $1.332 billion, part of a $4.5 billion revenue quarter.

- read Medtronic's announcement
- check out the WSJ story

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