Medtronic Buys Telehealth Company for $200 Million

On Aug. 12, Medtronic Inc. closed the acquisition of Cardiocom, a privately held developer and provider of integrated telehealth and patient services for the management of chronic diseases, in an all cash transaction of $200 million. 

Founded in 1997 in Chanhassen, Minn., Cardiocom’s technology enables healthcare providers to remotely monitor patients with chronic conditions such as diabetes and heart disease through products including home glucose monitors and interactive weight scale systems. The integrated solutions are aimed at reporting real-time patient data and proactive patient intervention programs to payers and healthcare providers based on accepted guidelines and evidenced-based protocols, which can result in better outcomes at a lower cost.

According to the Minneapolis, Minn.-based device giant, the purchase bolsters its expansion of medical device product offerings to broader healthcare services and solutions. The first area of focus for Medtronic will be in heart failure, where the addition of the Cardiocom technology and patient services to its product offerings will expand its reach to more patients across the heart failure care continuum, according to the company.

“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. The acquisition of Cardiocom is one step we are taking toward providing a combination of products and solutions that can help address those challenges,” said Omar Ishrak, chairman and CEO of Medtronic. “With our first integration of this technology focused on heart failure, we will have the unique opportunity to combine our leading diagnostics, therapies and patient management solutions. This combination will strengthen our ability to partner with providers and payers to help them reduce cost and improve quality.”

Accoridng to figures cited by Medtronic officials, the management of heart failure affects an estimated 7.5 million people in the United States and represents 1.1 million U.S. hospital visits per year at a cost of $39 billion annually. 

Daniel L. Cosentino, former CEO of Cardiocom, will become vice president and general manager of Cardiocom at Medtronic.

According to the Centers for Disease Control and Prevention, seven out of 10 deaths in the United States are from chronic disease, with heart disease, stroke, cancer, diabetes and arthritis as the top five chronic diseases.  Chronic diseases account for $3 of every $4 spent on healthcare or nearly $7,900 per every American. 

To rein in the costs of chronic disease, hospitals and physicians are moving to initiate or improve value-based delivery models aimed at better managing and coordinating the care of high-cost, chronic disease patients.  Hospitals are looking for more cost-effective care with the use of real-time patient data, earlier and more accurate interventions, and increased patient ownership and management of their disease. For example, one study of patients at the Veterans Health Administration showed the use of teleheath technology resulted in a 25 percent reduction in bed days of care and 20 percent reduction in number of admissions in heart failure.

As a result of new hospital re-admission penalties and a healthcare system trying to shift from fee-for-service to fee-for-value, the market for remote monitoring technologies is expected to grow significantly over the next few years. According to a report earlier this year from GBI Research, the U.S. market is expected to expand 184 percent, from $104.5 million in 2012 to $296.5 million by 2019.