Medtronic's Ishrak outlines health services expansion plans

Medtronic CEO Omar Ishrak

Medtronic ($MDT) CEO Omar Ishrak has filled in some of the details of the company's planned health services expansion, and the focus is global.

A major step in this strategy became clear just last week, with Medtronic's $200 million bid to buy patient monitoring company Cardiocom. But Ishrak, in conversations with both Bloomberg and Reuters, said that new technology is only part of the company's strategy in the U.S., where healthcare cost management is becoming more paramount, and in overseas markets.

"It's very much intentional strategy to build out a solutions company," Ishrak told Bloomberg. "In this transformation, it's not that we're leaving stuff behind and going somewhere else. It's that we are expanding what we have, beyond the episode of therapy itself. That way we can get full value for the benefits and make sure they are optimized."

Ishrak told Reuters that the company is already actively rolling out this game plan in both Europe and emerging markets. In Europe, for example, Medtronic is working with hospital administrators to try to help them boost efficiency in areas such as financing, equipment purchasing and outsourcing for certain functions.

"We have contracts with hospitals now and a pipeline of many more that are interested in those efforts," he said. Ishrak added that the service strategy initially targets central European countries and the Middle East, but that the company will expand the effort at some point into Southeast Asia, including India.

In the U.S., Ishrak said, Medtronic is trying to help hospitals move away from "fee-for-service" to "pay-for-value" and disease management financial models, which the Affordable Care Act actively encourages. And the Cardiocom acquisition will help Medtronic get a big head start on this phase of the plan. Cardiocom offers patient monitoring for patients with chronic diseases. And Ishrak told Bloomberg that the company will initially use the new technology to focus on heart failure patients to help them manage through their "entire disease state" and reach "a broader set of patients of patients who may or may not have had our devices."

Another initiative: Medtronic is working with larger hospital systems in the U.S. to help automate the way they acquire products, something Ishrak said the company wants to build on "fairly soon."

Isrhak's comments come in the wake of a stellar fiscal 2014 first quarter earnings for Medtronic. Soaring sales overseas and in emerging markets helped drive a double-digit hike in net earnings compared to the previous fiscal year.

- here's the Bloomberg story
- check out Reuters' take

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