Steering the medical devices industry into new territory
Name: Omar Ishrak
Title: Chairman and CEO
More than two years after Omar Ishrak became Medtronic's ($MDT) new leader and helped the Minnesota device giant revamp, diversify and globalize, he added a whole new ingredient.
Ishrak, a veteran GE Healthcare executive, no longer wants Medtronic to just manufacture medical devices and equipment. He also sees opportunity in helping hospitals and providers to deliver more efficient and effective care. Device companies typically train their hospital and provider customers how to use their devices, implants and med tech. That element remains. But a pure play device company adding a wide-reaching hospital care consultancy to its roster of goods and services is a novel thing in an industry that has struggled to adapt to declining VC investment, a sluggish insurance reimbursement climate and ever-slowing regulatory approval timelines.
If Ishrak's gambit succeeds, Medtronic's push to grab a bigger financial stake in more of the healthcare delivery process could serve as a model for its rivals. It may also provide a needed cushion in the face of clinical trial or product setbacks.
"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," Ishrak told Bloomberg in August 2013. "That way we can get the full value for the benefits and make sure they are optimized."
Medtronic created a new division last September to handle the expansion--Medtronic Hospital Solutions. It's initially focused on helping European hospitals modernize and better manage their cardiac catheterization labs and already has contracts with two U.K. hospitals to manage their cath lab facilities. Medtronic also completed a pilot program with a Dutch hospital that helped it save about $6 million over a year by boosting its efficiency with hospital staff training and on-site management. Long-term, the business will partner with hospitals to help boost their operational efficiency.
To help support the expansion, Medtronic paid $200 million last August for Cardiocom, a maker of disease management technology. The company also snatched up a 30% equity stake in NGC Medical SpA, a company that manages outsourced cath labs in Italy.
Ishrak has said he sees this strategy as helping the healthcare industry at large move away from fee-for-service healthcare toward payments for entire episode of care, with a greater focus on value.
He hammers this message home in meetings around the world and on Twitter.
In a Jan. 13, 2014 tweet from the J.P. Morgan Healthcare conference in San Francisco, he argued that a "move to value-based healthcare is critical for [the] med tech industry to grow & foster innovation."
-- Mark Hollmer (email | Twitter)
Study: Medtronic CEO Ishrak scores low on the narcissism scale
Medtronic debuts health services arm
Medtronic CEO Omar Ishrak tweets with a strategy in mind
Medtronic bags telehealth biz for $200M