Dive Brief:

• Medtronic has partnered with integrated Michigan health system Spectrum Health to create value-based healthcare programs, with an initial focus on automating identification of readmission events in patients who use a Medtronic cardiac resynchronization therapy device.

• This latest deal is risk based, according to Spectrum spokesperson Tim Hawkins, wherein the medtech giant agrees to pay the system if certain patient outcomes are not met. The partners are framing the collaboration as a chance to "use data and near real-time analytics to design programs intended to help standardize care, reduce clinical variation and deliver greater personalization of care."

• Medtronic has previously entered into value-based agreements with groups including Aetna and UnitedHealthcare, primarily in the diabetes space.

Dive Insight:

The move from volume to value in healthcare has increased interest in alternative payment models. In some cases, device manufacturers are taking on risk, as Medtronic did when it agreed to cover certain costs associated with the failure of its Tyrx antibacterial sleeves. Other deals, such as the Medtronic-Aetna partnership, give medtech companies a share of any costs saved or revenues made through the use of their products.

The first Medtronic-Spectrum program covers cardiac resynchronization therapy. Under an "existing financial accountability program," the partners will automate identification of readmission events in people who use Medtronic pacemakers and defibrillators and its AdaptivCRT pacing algorithm. AdaptivCRT reduced 30-day readmissions in a clinical trial. Automating the identification of readmissions could enable Medtronic and Spectrum to see if the algorithm delivers that benefit in the real world. 

That program alone may not have a significant impact on Medtronic. Spectrum has 14 hospitals and a health plan with 1 million members. However, there is scope for Medtronic and Spectrum to initiate further value-based programs and the collaboration could form part of a wider increase in the use of alternative payment models in the coming years.

The Trump administration set the stage for more value-based arrangements late last year by revising the Stark Law and Anti-Kickback Statute. The revisions, which took effect the day before President Biden was inaugurated, support reimbursement of bundles based on clinical outcomes and allow manufacturers to use two safe harbors to enter into arrangements for digital health technologies.