Medtronic CEO: Medical technology without regard to cost not sustainable

4:49 pm by | 3 Comments

Any new products introduced by medical device companies must not only have clinical value, but they must deliver economic value to customers, Medtronic (NYSE:MDT) CEO Omar Ishrak said at the Cleveland Clinic Medical Innovation Summit.

“Technology without a sense of the cost-effectiveness of that technology is not sustainable,” Ishrak said.

For Medtronic, that means thinking about how its new technologies will help its primary customers: hospitals and clinicians.

“Today when we try to commercialize something, the key question is: Is it worth it?” Ishrak said. “The fact that it’s better [clinically] is sometimes not enough.”


That requires a bit of a change in thinking by device companies, which have gotten good at performing studies to exhibit clinical value. Going forward, hospital administrators will demand to see an economic analysis and the financial benefit from introducing new technologies. Device companies need to figure out how to demonstrate that, Ishrak said.

Ishrak summed up Medtronic’s value proposition to customers with the following equation: clinical evidence + economic evidence + customized solutions = better customer value.

On the subject of economic value, moderator Michelle Cortez of Bloomberg News asked Ishrak to address the perception that Medtronic cares more about profits than improving healthcare.

Ishrak said the key for Medtronic is to be transparent and consistently do the right thing.

“We have to place integrity and patient safety above everything else we do,” he said.

Copyright 2015 MedCity News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Brandon Glenn

By Brandon Glenn MedCity News

Brandon Glenn is the Ohio bureau chief for MedCity News.
More posts by Author

Martha Bowers
Martha Bowers

My granddaughter, age 11, needs a new pump badly. My daughter is getting the runaround and is being denied a new pump for my granddaughter! What is the problem - this is the life of a child at risk!! Can you possibly help?


Where in your cost pass through chain does the actual 'cost' of the device impact the patient via the hospital sales model, which is 99% of the Medtronic business model in countries where socialized medicine is the norm? While I agree with your comment, especially where it points to the CEO of Medtronic, I fail to connect your thinking? Wouldn't it be a more salient comment to propose that the economic saving, in socialized countries within the pass-through chain you suggest, will be of benefit first to the government, then hopsital administrators (where the economic) savings a most justified? The patient in this case neither see's the cost, nor the savings.

Navin Ajmera
Navin Ajmera

Omar’s thinking is directionally correct in identifying hospitals and clinicians as primary customers of technology but falls short in assessing impact on true customer in the healthcare ‘cost pass through chain’ which is the patient. The distance along the ‘cost chain’ between a patient and technology innovator in developing country is much shorter compared to the developed markets, especially U.S. A typical ‘cost pass through chain’ in the U.S private sector. is Innovator/Manufacturer – Distributor- Hospital/Clinician- Insurance company- Insurance buyer (companies)- Insured Employee- Patient(s). Patients never felt the impact of spiraling healthcare costs until recently. This padded chain made it possible for companies such as Medtronic to easily pass on the cost of new technology without much resistance. Higher out of pocket costs (share of premiums, deductibles, co-pays, uncovered costs etc.) have opened up a new tributary that is starting to link patients more directly to the innovator/manufacturer. This will force the companies to find ways to pass the cost savings more rapidly to the ultimate true customer – patient. This in turn will necessitate a new R&D as well as sales and marketing business models. Developing countries like India, China and Brazil provide good test markets to implement these new business models and re-import back to the developed markets.