Medical Device Daily Senior Editor
In a transaction seen as advancing Medtronic's (Minneapolis) push to expand beyond its traditional medical device product offerings into broader healthcare services and solutions, the company reported Monday that it had closed on its acquisition of Cardiocom (Chanhassen, Minnesota), a privately held provider of integrated telehealth and patient services for the management of chronic diseases.
The all-cash deal carried a price tag of $200 million.
Operating in the telemonitoring/telehealth sector since 1999, Cardiocom provides a wide range of services that let healthcare professionals remotely identify symptomatic patients and intervene as needed to head off unnecessary hospitalizations. It is especially known for its work in helping monitor heart failure patients, and also addresses COPD, asthma, diabetes, high blood pressure and obesity.
Healthcare industry watchers expect the market for home monitoring to grow, impacted in particular by new rules that financially penalize hospitals who have patients return for additional treatment within a month of their initial visit.
Mike Genau, senior vice president and president of Medtronic's U.S. Region, said the acquisition of Cardiocom provides Medtronic with a technology platform and services that allow physicians to better manage patients with chronic diseases. "The management of heart failure, which affects an estimated 7.5 million people in the U.S., represents 1.1 million hospital visits per year in the U.S. at a cost of $39 billion." He said the integration of Cardiocom's products/services portfolio with Medtronic's product offerings will help reduce that burden on hospitals, physicians, payers and patients.
Cardiocom CEO Daniel Cosentino said his company's approach to care coordination and telehealth services "has allowed customers to reduce the overall cost of care, primarily through reduced hospitalizations."
Cosentino, who joins Medtronic as vice president and general manager of the Cardiocom businesss unit, said, "We look forward to joining Medtronic as part of a combined portfolio of products and solutions that can positively impact outcomes for patients and bring value to our customers. The synergy between our technologies and Medtronic's large presence with hospitals, physicians and payers will dramatically increase our distribution channels for the Cardiocom patient management technologies and services."
In further addressing the new emphasis at Medtronic, Chairman and CEO Omar Ishrak said in a company statement, "With our integration of this technology focused on heart failure, we will have the opportunity to combine our leading diagnostics, therapies and patient management solutions, [which] will strengthen our ability to partner with providers and payers to help them reduce cost and improve quality."
The Centers for Disease Control and Prevention (CDC; Atlanta) says that seven of every 10 deaths in America are from chronic disease, with heart disease, stroke, cancer, diabetes and arthritis being the leading causes. Chronic diseases are said to account for $3 of every $4 spent on healthcare in the U.S., or nearly $7,900 per person.
Several recent studies have cited the anticipated growth curve for remote monitoring, including one by Juniper Research (Basingstoke, UK) saying that over the next five years, remote patient monitoring will result in healthcare cost savings of up to $36 billion worldwide. "Even though remote patient monitoring, particularly for chronic diseases, is still at a very early stage in the development cycle, it fits well with new healthcare practices and the goal of keeping patients out of hospitals," said Juniper.
A study by Spyglass Consulting Group (Menlo Park, California) noted that accountable care organizations are using remote patient monitoring technology as an early symptom management tool to remotely monitor and manage high-risk chronically ill patients, and that such efforts have been shown to reduce the risk of hospital readmissions, control healthcare delivery costs, and increase access to care.
Another report, this one by the firm Research and Markets (Dublin, Ireland), forecasts the global telemedicine market to grow at a compound annual rate of 18.9% over the period through 2016. It said remote patient monitoring is especially gaining acceptance in Europe, the Middle East, and Africa, and that an increase in federal telehealth grants has helped spur growth in the U.S.
Ishrak cited the push under healthcare reform initiatives to meet growing economic challenges, saying that healthcare systems around 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."
The acquisition is seen as supporting Medtronic's transition toward providing broader healthcare services and solutions, which it said offer "meaningful clinical and economic value for hospitals, physicians, patients and payers." With heart failure as the first area of focus, the company said 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.
With market-leading global franchises in cardiovascular, diabetes and pain management, Medtronic has recently emphasized its plans to expand its involvement in the complementary healthcare services arena, going beyond providing implanted medical devices for patients in need of them. With Cardiocom being focused on a number of "challenging" diseases, its new owner cited the smaller firm's remote monitoring and software products that enable both "efficient care coordination and specialized telehealth nurse support."
Medtronic said it expects the net impact from the transaction to be neutral to fiscal 2014 earnings.
In other dealmaking news: SigmaCare (New York) reported that it has completed its acquisition of 6N Systems (Clifton Park, New York), a provider of financial and clinical tools to streamline workflow, information management and operations for the long-term and post-acute care (LTPAC) market. SigmaCare builds on its market leadership in clinical decision support, workflow automation, care coordination and analytics by now offering an integrated clinical and financial solution for LTPAC providers.
"We are excited by the opportunity to bring our solution to a broader market and we're looking forward to collaborating with SigmaCare on a joint product strategy and service offering," said Darcy Baldwin, 6N Systems COO.
"After an extensive search, SigmaCare selected 6N Systems because of their highly scalable architecture built on the latest technology, their commitment to professional services and the strength of the 6N team," said Stephen Pacicco, SigmaCare CEO. "We look forward to offering an integrated clinical and financial solution while still providing customers with the option of using the financial system of their choice."
SigmaCare develops clinical solutions for long-term and post-acute care facilities that lower risk, reduce rehospitalizations, decrease costs and increase reimbursement. SigmaCare automates the complete workflow, delivers clinical decision support, integrates with third-party providers and improves coordination across care settings.