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| Medtronic executive vice president Rob ten Hoedt |
Medtronic ($MDT) wants to be known for manufacturing high-quality devices and providing related services as well. To that end, the company today announced the acquisition of privately held Italian company NGC Medical S.p.A for $350 million.
The new addition offers a variety of services to hospitals, such as infrastructure design and equipment management. The 100-person company will join Medtronic's hospital solutions business.
"As we are all acutely aware, current models of delivering healthcare are not sustainable, and Medtronic is intent on finding new ways to partner with physicians, hospital systems, patients, payers and governments around the world to meet their cost and access challenges and to deliver high quality healthcare," Medtronic executive vice president Rob ten Hoedt said in a statement. "NGC's managed services expertise further enhances this momentum, making the combined entity an ideal partner for hospitals."
Medtronic already offers services to many hospitals in Europe, and touted a partnership with Maastricht University Medical Center in the Netherlands that it claims resulted in savings of $6 million in one year. Medtronic says it is in discussion with an additional 150 healthcare systems around the world.
Last year Medtronic purchased remote patient monitoring firm Cardiocom for $200 million as its push into services gathered momentum. Shortly afterward, Medtronic CEO Omar Ishrak said during an earnings call that he "is determined to transform Medtronic from being a primarily device provider today into the premier global medical technology solutions partner of tomorrow."
The acquisition was followed by the formal launch of a health services arm in September 2013.
During the August 2013 earnings call Ishrak expounded on the services strategy, saying that in addition to direct revenue, worth $500 million in Europe, "I think the impact that it (services) will have through synergy on the sales of our regular devices perhaps will be more and more meaningful." In particular he said that managing hospitals' catheterization labs is one of the options he has been exploring.
So far the push into services has been mostly focused on Europe, but Ishrak said it will gather steam in the U.S. if the country continues to move from pay-per-procedure system to a value-based payment system.
- read the release