Insulin pump companies have raced to come up with better-performing and more user-friendly pumps, but building the better mousetrap is only half the battle. The best pumps in the world won’t sell if they aren’t prescribed by doctors or used by people with diabetes.
Medtronic has launched a bold move to try and solve that final part of the equation. This past month, the medical device company announced it had acquired Diabeter, one of the largest independent Type 1 diabetes specialist centers in Europe. This marks the first time that Medtronic has invested in direct diabetes care. The company, which already has invested in catheter and cardiology clinics, is not content to just provide tools for medical care, says Dr. Francine Kaufman, Medtronic’s chief medical officer.
“We want to offer more than just devices,” says Dr. Kaufman. “We want to offer more comprehensive solutions.”
With the acquisition, Medtronic has taken ownership of a practice that oversees care for some 1500 children and young adults with Type 1 diabetes in the Netherlands. The acquisition is not going to affect Medtronic’s bottom line one way or another, but it is more than symbolic – Dr. Kaufman says Diabeter has been on the vanguard of developing tools for sharing blood sugar data between doctors and patients in real time. Medtronic shares a similar quest with Diabeter for utilizing data to create better health outcomes.
“They are a very unique set of clinics and technologies run by someone we knew for years and years and years,” Dr. Kaufman says.
Of course, this is not simply an act of altruism in the name of better patient care. The company is hoping to learn from Diabeter data models to improve insulin pump care. The company also wants to use investment in clinics to expand insulin pump use among the diabetes population. Dr. Kaufman sees Medtronic growing out Diabeter over time.
“We do believe their system…is a very excellent model that can be replicated, not just throughout the Netherlands, but beyond,” she says.
At first glance, it would seem a merger between a device manufacturer and a clinic would be prone to creating a closed-market loop, whereby all patients would be using the parent company’s device, but Dr. Kaufman insists this will not be the case. The patient’s needs will come first, she says.
“They can decide what they want. We’re not a monopoly, we’re not going to do a monopoly,” she says. “There is a firewall to the practices.”
This is not the first time that pharma companies have branched into direct care models. There has been increased partnership between hospitals, clinics, and device and drug companies in the past couple of decades. In a recent earnings call, Medtronic CEO Omar Ishrak said that Medtronic’s catheter branch has 50 long-term contracts with hospital systems, representing some $1 billion in revenue, according to a Fierce Medical Devices report. Dr. Kaufman says Medtronic is using the model of IBM, which started by building computers and now focuses more on service.
“This is occurring more and more in medicine,” she says.
Now that Medtronic has bought Diabeter, it will take some time for the two organizations to fully integrate. Dr. Kaufman says observers shouldn’t expect quick expansion or changes in the business models of either Diabeter or Medtronic overnight.
“We’re newlyweds,” she says. “We kind of have to get in bed together and figure out how best to go forward.”
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