CardioNet: The Promise and Perils of Wireless Medicine

Article preview reprinted from IN VIVO -  February/March, 2010

CardioNet created the first product in a new category: mobile cardiac outpatient telemetry. By enabling the continuous monitoring of ambulatory patients for up to 30 days, CardioNet proved - and validated in clinical trials - that it could substantially improve the diagnosis of arrhythmias more effectively than what was then the standard of care. In 2009, the company was approaching profitability when the local Medicare carrier upon which its business depends unexpectedly slashed reimbursement for the company's core product. The management of CardioNet is frustrated. CardioNet has tried to do things the right way. The company validated its technology in a 300-patient controlled clinical trial proving superior efficacy against a gold standard in a disease where early and accurate diagnosis can clearly improve outcomes. Clinicians recognize the value of CardioNet's product, as evidenced by the 50% growth in patient volumes the company enjoyed last year, and the 30 to 40% growth it's expecting for this year. Yet the company fights for the recognition of payors, and for its life. Now, in the face of these reimbursement pressures, CardioNet's number one priority is to gain Medicare reimbursement at the national level, at a rate, it hopes, that recognizes both the costs and value of long-term 24/7 ambulatory monitoring, thereby both validating the company's strategy and supporting the development of wireless medicine as a whole. Read more....

CardioNet: The Promise and Perils of Wireless Medicine

Article preview reprinted from IN VIVO -  February/March, 2010

A pioneer in wireless continuous patient monitoring, CardioNet has experienced a reimbursement setback that threatens the way it does business. It now must convince Medicare to institute a new national payment methodology that accounts for both the value and the cost of 24/7 monitoring.

CardioNet created the first product in a new category: mobile cardiac outpatient telemetry.

By enabling the continuous monitoring of ambulatory patients for up to 30 days, CardioNet proved – and validated in clinical trials – that it could substantially improve the diagnosis of arrhythmias more effectively than what was then the standard of care.

After investing nearly $300 million in its platform, the company was on track to achieve profitability in 2009 when the local Medicare carrier, upon which it was dependent, cut its reimbursement rate by one-third; some commercial payors then followed suit, driving the company into the red.

CardioNet's strategy has been to reduce operating expenses as it gets ready to launch a fifth generation product that the company claims offers cost advantages, while having to put on hold other product development programs.

In the face of these reimbursement pressures, CardioNet's number one priority is to gain Medicare reimbursement at the national level, at a rate, it hopes, that recognizes both the costs and value of long-term 24/7 ambulatory monitoring, thereby both validating the company's strategy and supporting the development of wireless medicine as a whole.

There's a lot of talk, in industry, in clinical circles, and in Washington about the clinical value of information; how it might better be used to improve outcomes and reduce costs. But it's still just talk, or so the management at CardioNet  must feel after bringing a clinically validated, information rich solution to the diagnosis of cardiac arrhythmias to an appreciative clinical community, only to be stymied by insufficient Medicare reimbursement. Randy Thurman, president and CEO of CardioNet, says, "For 20 years at least, people have been talking about the value of medical information, but no one has succeeded in commercializing it. No one is willing to pay for it."

Thurman is frustrated. CardioNet has tried to do things the right way. The company validated its technology in a 300-patient controlled clinical trial proving superior efficacy against a gold standard in a disease where early and accurate diagnosis can clearly improve outcomes. Clinicians recognize the value of CardioNet's product, as evidenced by the 50% growth in patient volumes the company enjoyed last year, and the 30 to 40% growth it's expecting for this year. Yet the company fights for the recognition of payors, and for its life. In 2009, the company was approaching profitability when the Medicare carrier upon which its business depends unexpectedly slashed reimbursement for the company's core product by more than 30%, throwing CardioNet into survival mode.

On one hand, there is nothing surprising in the story of a medtech company that suffers because its fate is tied to one product and the decisions of a single large payor, and Medicare has a history of ratcheting down reimbursement over time. But in another sense, the battle that CardioNet is waging goes right to the heart of the biggest issue in wireless medicine: what is the proper payment model for remote, continuous, 24/7 wireless patient monitoring? What pricing methodology recognizes both the value of a continuous flow of information in terms of avoiding serious episodes of disease, hospitalizations or death, and at the same time the costs of providing these services, including what it takes to offer these capabilities in a form that is useful for patient management?

CardioNet is often called a pioneer in wireless medicine, an emerging field into which much hope has been poured for its potential to address some of the central issues of health care reform: how to deliver more efficient and cost-effective health care and reach more patients. The belief is that technologies emanating from the IT and telecommunications industries will create a new kind of connectivity between ambulatory patients, information systems that can automate the interpretation of patient data, and caregivers, who can thus make more timely decisions about patient care. Such solutions, in fostering the flow of information to and from patients as they go about their daily lives, are intended to fill in gaps in the care continuum, which is largely built up around hospitals and other institutional settings. Wireless connectivity and IT can also create efficiencies by enabling physicians and other specialists to manage more patients with less manpower.

by Mary Stuart

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Companies mentioned in this article

Baxter International Inc.

Card Guard AG

LifeWatch Corp.

Cardinal Health Inc.

CardioNet Inc.

Medtronic Inc.

Royal Philips Electronics NV

Sanofi-Aventis

iRhythm Technologies Inc.

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