by Conor Hale | May 10, 2019
Medtronic is walking away from the knee replacement work being done by Responsive Orthopedics, a startup it acquired in 2016 that had aimed to disrupt the market with lower-cost artificial joints and a bundled payment model.
Minneapolis-based Responsive, described by Medtronic as a project being worked on by a small team, will be shut down following changes in a federal pay-for-performance program aimed at lowering the costs of hip and knee surgery.
Medicare’s Comprehensive Care for Joint Replacement payment model was first implemented in April 2016 by tying payments and penalties to 90-day patient recovery rates and was made mandatory for 1,800 hospitals spanning 67 population centers and a quarter of the country’s Medicare population. The agency estimated the program would save the government $343 million over five years.
Then in 2017, the Trump administration proposed reducing the number of mandatory population centers from 67 to 34—with the remaining 33 participating on a voluntary basis, along with all of the program’s rural and low-volume providers.
“Since the company acquired Responsive Orthopedics in 2016, federal guidelines for orthopedic joint replacement have shifted and implant pricing has become highly competitive, making it difficult for Medtronic to offer a disruptive solution,” Medtronic said in a statement.
The medtech giant began its withdrawal from the orthopedic implant market earlier this year “in response to shifting market dynamics and to focus the business for future growth,” the company said, while maintaining a commitment to value-based healthcare.
“The Responsive Orthopedic knee system remains a high-quality, effective implant that has performed well for the patients who received it,” said Medtronic, which will hold on to the intellectual property covering Responsive’s artificial knee, as well as a hip joint that has not yet been cleared by the FDA.