EVOLVING MEDTRONIC IN A TIME OF HEALTHCARE …

1 EVOLVING MEDTRONIC IN A time OF. HEALTHCARE TRANSFORMATION. PERSPECTIVE SYNOPSIS: MEDTRONIC is EVOLVING by innovating in new ways and collaborating with new partners globally to bring meaningful innovations to market, finding ways to align value among the system's stakeholders, and increasing access to care around the world. Recognizing that no one can solve the world's HEALTHCARE challenges alone, MEDTRONIC is committed to working in partnership with others so that we can all witness the benefits of value-based HEALTHCARE . During the six decades of MEDTRONIC 's are fundamental to all HEALTHCARE systems multiple times by different departments existence, our Mission has remained the around the world. in a hospital or from various specialists same: to alleviate pain, restore health, and they are seeing.

2 Data and information does extend life for people around the world. While these universal HEALTHCARE needs not follow the patient, and so doctors, We have worked hard to be at the forefront are fairly clear, our collective ability to nurses and caregivers operate with only of medical device innovation, challenging deliver on these goals is complicated by a part of the picture of a patient's real ourselves to develop high-quality therapies a range of challenges, including an aging status. Coordination between public and that positively impact people's lives. We global population, an increasing burden private payers, hospitals, and industry have accomplished a lot today more of chronic disease, legacy payment and can be lacking, contributing to waste and than 62 million people benefit from our delivery systems with misaligned incentives, inefficiencies that consume precious technologies each year, equating to two and government policies and regulatory HEALTHCARE dollars.

3 In fact, it's estimated people every second. systems that, at times, can be cumbersome. that 20 to 40 percent of resources spent HEALTHCARE leaders around the world are globally on health are wasted every But, we also know that we participate in increasingly acknowledging that our current global HEALTHCARE systems that are facing approaches aren't effective or sustainable. In short, our current siloed HEALTHCARE intense clinical and economic challenges. systems are struggling to deliver on what If not corrected, these issues may serve to they were set up to do deliver quality, undermine global growth and development affordable patient outcomes that return and leave millions around the world The future of HEALTHCARE people to fuller, more productive lives.

4 Untreated for even the simplest diseases. requires new We believe that what got us to the current approaches and new state of HEALTHCARE is not necessarily DRIVING FOR MORE ALIGNED, what will propel us forward. The future of forms of innovation. VALUE-BASED care . HEALTHCARE requires new approaches and HEALTHCARE systems around the world new forms of innovation. are experimenting with different ways What has made tackling these challenges to incentivize health systems to address even more difficult is the disjointed and these problems. In the United States, HEALTHCARE 'S GROWING CHALLENGES inefficient nature of how HEALTHCARE is the Affordable care Act has served to At MEDTRONIC , we believe the history of delivered. While physicians and HEALTHCARE promote the experimentation with new medicine has been and will be a continuous practitioners perform exceedingly well and models of care that promote integration quest to ensure that people receive the with the utmost expertise, they operate in or care coordination across a patient's life-saving or life-enhancing treatments HEALTHCARE systems that have traditionally care continuum.

5 Meanwhile in the United they need to return to full life. We also rewarded volume of care over value of care . Kingdom, the National Health Service recognize that access to quality HEALTHCARE These fee-for-service or procedure-based (NHS) in 2013 made a commitment to bring is a fundamental right of all people around payment and delivery systems are typically together local authorities, care and support the world. highly fragmented, siloed and disconnected providers, housing services, public health leading to one of our new challenges: workers, and others to make further steps The quest for better HEALTHCARE stems inefficient, uncoordinated care . This is toward better integrated care . from foundational or universal HEALTHCARE especially true for patients with chronic needs for any HEALTHCARE system.

6 The goals disease the most costly patients who Additionally, to address underlying payment of improving clinical outcomes, expanding routinely traverse our medical systems. systems, the Centers for Medicare &. access, and optimizing cost and efficiency Patients may have the same test ordered Medicaid Services (CMS) is putting into EVOLVING MEDTRONIC 1 OF 6. place new financial incentives that reward and its importance to the future of our believes we can play a supportive role for the quality of care provided rather than the HEALTHCARE systems. We have incorporated providers and clinics by augmenting their volume of care . In January 2015, the these principles into our research and care management strategies through our Department of Health and Human Services development, clinical studies, HEALTHCARE remote monitoring technologies and service set a goal of tying 50 percent of traditional, reimbursement, market development, offerings.

7 Or fee-for-service, Medicare payments and commercialization areas. We have also to quality or value through alternative conducted numerous economic studies on Finally, MEDTRONIC is also committed to payment models, such as Accountable our medical devices over the last three years. bringing our financial assets and business care Organizations or bundled payment expertise to bear in our partnerships. We are arrangements by the end of using our strong financial assets and cash to underwrite pilots and demonstration As part of these reform efforts and others MEDTRONIC 's goal is projects; invest in new technology and seen across the globe, the focus on to ensure that the service development for tailored needs and seamless care and value-based HEALTHCARE applications; and finance patient access and power of technology capacity-building efforts around the globe.

8 Is a promising attempt to realign health systems toward thinking about what really is considered and Furthermore, we are able to offer our health improves patient care over the long term. leveraged within system partners our business expertise in large-scale integrations and consolidations;. HEALTHCARE systems process improvement and re-engineering;. RESHAPING MEDTRONIC TO SUPPORT as a means by which to and quality management systems to ensure VALUE-BASED EFFORTS our new business models and partnerships deliver better patient- At MEDTRONIC , we believe that our utilize best-in-class operating principles. technologies, the data and insights they centered outcomes. create, and our expertise can be combined in partnership with hospitals, payers, and LEADING THE VALUE-BASED.

9 Governments to help establish aligned, This strategy expanded in 2013 when we HEALTHCARE EVOLUTION. value-based HEALTHCARE models that can identified an opportunity to increase value While MEDTRONIC remains focused on deliver better patient outcomes while not only with our devices but also through developing technologies and services that maintaining or reducing costs. our clinical expertise and HEALTHCARE system can drive more value into existing health knowledge. That's one of the reasons we systems, we are also actively leading and We recognized the trend toward increasing created the MEDTRONIC Integrated Health participating in efforts around the globe value several years ago and committed Solutions (IHS) business that moves aimed at re-architecting HEALTHCARE delivery ourselves to thinking and working in new beyond devices to focus on system-level and payment systems to better reward ways to ensure we are contributing to driving services and solutions.

10 Today, Integrated patient outcomes in the future. Many around more value in our offerings. We began our Health Solutions is helping hospitals and the world refer to this movement as value- evolution by introducing a concept called health systems align value across the care based HEALTHCARE . These efforts are in economic value, incorporating it as a continuum by delivering more efficient and their earliest beginnings and will be defined cornerstone of our business strategy in improved care to patients. and evolve over time . MEDTRONIC 's goal is 2012. In short, we saw a shift in what our to ensure that the power of technology is customers expected from us. They didn't Through IHS, we saw an opportunity to considered and leveraged within HEALTHCARE just need clinical value from our therapy use our knowledge of chronic disease and systems as a means by which to deliver innovations; they needed economic value technology to invest in and grow patient better patient-centered outcomes.