February 28, 2018 -- Medtronic is taking its biggest step to date in the world of value-based healthcare.

Medtronic is partnering with Lehigh Valley Health Network (LVNH) of Pennsylvania on a unique, wide-ranging healthcare program designed to deliver better care for hundreds of thousands of patients while saving the health system tens of millions of dollars.

“This partnership is exciting, not only for Medtronic and Lehigh Valley Health Network, but for healthcare as a whole,” said Omar Ishrak, chairman and CEO of Medtronic. “This can serve as a template for how we can work together to achieve our mutual goals of better clinical and economic outcomes.”

Over the five years of the agreement, the partnership is expected to treat up to 70 different medical conditions and impact 500,000 patients in northeast Pennsylvania, while reducing the cost of care by at least $100 million – and potentially pioneering a new era in healthcare.

“The possibilities are really endless,” said Brian Nester, DO, president and CEO of Lehigh Valley Health Network. “This is the kind of forward thinking we’ll be reaching for in this partnership. This is the future of healthcare, and we’re about to begin developing it right here in our own communities.”

The possibilities are really endless... this is the future of healthcare.

Brian Nester, DO, President, and CEO
Lehigh Valley Health Network

More Than Technology

Part of the financial structure of the arrangement will be based on whether the technology used to treat a patient demonstrably improves that person’s outcome or reduces costs. One example would be the Medtronic TYRX™ Absorbable Antibacterial Envelope. The Envelope stabilizes a cardiac electronic implantable device (CIED) such as a pacemaker or implantable cardioverter defibrillator (ICD) and releases antibiotics in the days after surgery. The TYRX Envelope is designed to reduce costly infections in high-risk patients who receive such heart devices, and Medtronic provides a rebate to the hospital if an infection occurs.

But technology is just one element of the partnership.

Decades of experience in implantable medical devices has helped Medtronic develop a deep expertise in efficient surgical processes and optimizing post-operative care for patients. LVHN will leverage that knowledge to improve its own systems and processes.

“This would result in an everyday formula for better health and better care at better costs,” Nester said. “Multiply that by the number of patients in need of common procedures that may be amenable to this, and the cost savings become exponential.”

The partnership with LVHN will involve all of Medtronic’s key businesses: Diabetes, Cardiac and Vascular, Restorative Therapies and Minimally Invasive Therapies, as well as its Integrated Health Solutions business. At the outset, Medtronic and LVHN will focus on teaming up to treat 10 to 15 specific conditions, including lung cancer, obesity, heart failure, stroke, joint replacement, infection control, respiratory compromise, coronary artery disease, hernia, and peripheral artery disease. Eventually they believe that list will expand to 70 medical conditions.

Crunching Data Will be Key

In a value-based healthcare system, payment is based on whether the patient experiences a positive outcome, not simply on providing a treatment.  In a value-based system, that means defining an acceptable outcome, and then being able to measure it. “We must be able to demonstrate improved outcomes and the economic value of therapies,” Ishrak said. “And so, a key element to the success of our partnership will be the development of an innovative collection and analysis initiative.”

Ultimately, these value-based programs will contribute to a more sustainable health system and a healthier community.

Omar Ishrak
Chairman and CEO
Medtronic

Another example of data crunching would be analyzing patient medical information from the eight hospitals in the Lehigh Valley Health Network, as well as data gathered from technology devices. The results may, for instance, determine which patients might benefit most from being remotely monitored at home. Such monitoring can help prevent unnecessary and expensive return trips to the ER or the doctor’s office. Or, those analytics may reveal what segments of the population are prone to certain medical conditions, allowing Medtronic and LVHN to develop new technologies or programs that aid in prevention of those conditions. 

LVHN has won numerous awards in healthcare analytics and is the only health system in the country that in 2017 also received the Davies Award from HIMSS. “Data Analytics is our strength and using it to direct the right care, to the right patient, at the right time is the true north for value-based healthcare.” Nester said.

The agreement is a first-of-its-kind for both Medtronic and LVHN. While both leaders recognize the difficult work that lies ahead, each expressed confidence in the future.

“Moving from fee-for-service to fee-for-value is like trying to convert a gasoline-powered car to run on solar power while the car is moving down the highway,” Nester said. “Change of this order of magnitude will not come overnight. But we now have new paths to deliver it in an accelerated fashion, through innovative health management and new creative partnerships.”

“Ultimately, these value-based programs will contribute to a more sustainable health system and a healthier community,” Ishrak said. “We have just started to scratch the surface of value-based healthcare. I can only imagine what the next five years of this partnership will bring.”

The world of healthcare is about to find out. Read more about Collaboration in Healthcare.