Medtronic Case Analysis

2105 Words5 Pages

3) Consolidation, vertical integration, and the emergence of the financial risk-bearing customer for Medtronic Payers are consolidating, providers are merging, and both are vertically integrating, creating a new breed of hybrid clinical and risk-bearing customers for Medtronic. Their struggle to effectively manage outcomes and costs exposes a need that Medtronic can address. The current health care landscape has been characterized by large scale consolidation and vertical integration of payers and providers. This has led to a handful of dominate players with substantial influence, and an increasing overlap in responsibilities between payers and providers. Although payers and providers have traditionally been on opposing sides, battling each other about quality of care versus cost-effective care, they are shifting to working together to achieve better value. Consolidation within health plans has included several large scale mergers such as Anthem and Cigna as well as Aetna and Humana, primarily driven by a need for growth, with a particular focus on growth within the Medicare Advantage market. If successful, the deals would collapse the health-insurance industry’s top five players into …show more content…

Along the same lines as the capability gap for bundled payment models, ACOs are experiencing a similar need. CMS reported the financial results for more than 300 ACOs in August of 2015, and together, the ACOs generated savings of over $400 million. Despite these aggregate savings, more than 40% of those ACOs increased spend relative to their baseline expenditure. (Source: CMS, Medtronic analysis) As a result, there is significant opportunity for Medtronic to leverage the breadth of its product line and VBHC capabilities to play a role in bridging care settings and connecting disparate care teams in order to improve outcomes and lower costs over a longer time

In this essay, the author

  • Explains that multiple forces are leading to the meshing of payers and providers and creating a new type of customer for medtronic’s future vbhc offerings.
  • Explains that humana acquired concentra – cocentra, a privately held healthcare company, which brings more than $800 m in revenue, 300 medical centers in 42 states, and an occupational health platform.
Show More
Open Document