How Medtronic Is Accelerating its Economic Value Strategy for Growth


Dec. 1 2017, Updated 10:33 a.m. ET


Medtronic (MDT) has been growing amid the changing landscape of the healthcare industry with its three-pronged growth strategy, as we discussed in the previous article. One of these key growth strategies is growth through economic value creation.

Medtronic registered solid growth driven by this strategy in the last few quarters. The company is focused on developing value-based solutions in its businesses and geographies to drive better patient outcomes. The company is working to contribute to the shift toward value-based healthcare.

In this article, we’ll discuss some of these recent initiatives, which are accelerating the reach and growth of Medtronic’s market share.

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Value-based programs that are driving Medtronic’s growth

Medtronic’s TYRX-based infection reduction program is accelerating at a strong pace. The number of accounts under this contract tripled to around 900 hospitals in fiscal 2Q18. For further details, please read Medtronic’s Agreement Will Expand the Use of Its Tyrx Envelopes.

According to Medtronic, “This past quarter over 20% of our U.S. CRHF’s implantable revenue was covered under a TYRX related value-based healthcare arrangement that links total payment to patient infection outcomes.”

Cardio and Vascular Group

In the CVG (Cardiac and Vascular Group) business, Medtronic has launched a value-based program that links procedure payment to patient outcome improvement such as reduced interventions. These interventions relate to use of Medtronic’s AF (atrial fibrillation) ablation as well as AAA (abdominal aortic aneurysm) and DCB (drug-coated balloon) therapies.

These interventions also relate to reduced rehospitalizations when using the company’s AF (atrial fibrillation) ablation, ICD (implantable cardioverter defibrillator), and CRT (cardiac resynchronization therapy) technologies.

Several peers of Medtronic have adopted value-based growth strategies to sustain and grow in the healthcare industry, which are shifting toward value-based care. These companies include Becton, Dickinson and Company (BDX), Abbott Laboratories (ABT), and Stryker (SYK), which reported sales of $3.2 billion, $6.8 billion, and $3.0 billion, respectively, in their recently reported quarters.

Investors interested in participating in Medtronic’s growth potential can invest in the Vanguard S&P 500 ETF (VOO). Medtronic accounts for ~0.50% of VOO’s total holdings.


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