TRANSFORMING MEDTRONIC TO SUPPORT …

1 TRANSFORMING . MEDTRONIC . TO SUPPORT PROGRESS. IN HEALTHCARE 2017. PERSPECTIVE SYNOPSIS: Healthcare is facing immense challenges. From shifting payment models to problems of access, providers and payers are struggling to improve patient outcomes and lower overall costs. While there is no single solution, we recognize that those who deliver care are at the center of this transformation and that technology can help propel them forward. At MEDTRONIC , we know we don't have all of the answers, but we are committed to partnering with others to take healthcare Further, Together. During the six decades of MEDTRONIC HEALTHCARE'S GROWING CHALLENGES healthcare systems that have traditionally existence, our Mission has remained the In many ways, the history of medicine is rewarded volume of care over value of care.

2 Same: to alleviate pain, restore health, and the story of a continuous quest to ensure These fee-for-service or procedure-based extend life for people around the world. that people receive the life-saving or life- payment and delivery systems are typically enhancing treatments they need to return highly fragmented, siloed and disconnected We are a technology company deeply to a full life. As we have moved along this leading to one of our new challenges: rooted in pushing the limits of innovation, journey, those who provide care to patients inefficient, uncoordinated care that and we have worked hard to be at the have cultivated a core set of beliefs that produces an estimated 20 to 40 percent of forefront of medical device development, healthcare systems around the world wasted resources spent globally on health reinvention and disruption challenging now hold as common fundamental goals: every year.

3 Ourselves to create high-quality therapies improving clinical outcomes, expanding that positively impact people's lives. And we access, and optimizing cost and efficiency. In short, our current system is struggling have accomplished a lot: today more than to deliver what we all want to accomplish: 62 million people benefit from our high-quality and affordable care that returns technologies each year, equating to two people to fuller, more productive lives. people every second. The future of healthcare What we need is a more coordinated, But we also know that we participate in a requires new connected network where technology global healthcare environment that faces approaches and new empowers providers to deliver better intense clinical and economic challenges.

4 Care to patients throughout their health If not corrected, these challenges may forms of innovation. journey and where outcomes that matter undermine progress while leaving millions to patients are prioritized relative to the around the world untreated. We believe the cost. But what will this look like? For patients approach that got us to the current state The ability to achieve these goals, however, undergoing a complex procedure, this of healthcare is not necessarily what will is complicated by a range of challenges, might mean therapy optimization that push us ahead. The future of healthcare including an aging global population, an protects them from harmful complications requires new approaches and new forms of increasing burden of chronic disease, and readmissions.

5 In common surgeries innovation. payment and delivery systems with that have a wide variance in outcomes, misaligned incentives, and government such as hip and knee replacements, this MEDTRONIC has contributed to human welfare policies and regulations that, at times, can could mean bundling services for patients by partnering with others to create medical be cumbersome. Total global healthcare and physicians throughout the entire technologies that improve patient's lives. spending now exceeds $ trillion, about episode of care to ensure consistent and The full power of these technologies and 10 percent of the world's Gross Domestic positive results. And for people with chronic the information and insight we know they Product, and it is expected to continue diseases, this vision will entail collaboration generate, however, has not been fully growing.

6 Additionally, most of this with patients and their clinicians to help realized. Our technologies, services and spending comes from efforts to fight the manage the condition. people are powerful tools for those seeking leading causes of global mortality . to drive more seamless, integrated care and heart disease, stroke, cancer, chronic better patient outcomes. Fundamentally, respiratory diseases, and diabetes EXPERIMENTING TO ACHIEVE GREATER. we believe the world would be a better, which account for 87 percent of all deaths VALUE IN HEALTHCARE. healthier place if we were able to more fully in high-income countries. Around the world, healthcare systems are capture and apply the power of technology in the early stages of experimenting with to integrate care and generate better What has made tackling these challenges different ways to address these challenges.

7 Outcomes for patients. even more difficult is the disjointed and In many countries, new models of care inefficient nature of how healthcare is are emerging that promote integration or delivered. While physicians and healthcare care coordination across a patient's care practitioners perform exceedingly well and continuum. Take the United Kingdom, with the utmost expertise, they operate in for example, where the National Health TRANSFORMING MEDTRONIC 1 OF 5. Service (NHS) made a commitment to bring GOING FURTHER, TOGETHER thresholds. We constructed a similar together local authorities, care and SUPPORT Though we firmly believe MEDTRONIC is partnership with United Healthcare, another providers, housing services, public health already playing a unique role in facilitating major payer in the United States, and are workers, and others to make further steps the move toward a more aligned, value- pursuing other agreements that guarantee toward better integrated care.

8 Based environment, we know we can and the performance of our technologies will will do more. We call this new approach lead to better patient results. Similarly, to address underlying payment Further, Together. Further, because we systems, the Centers for Medicare & will continue to drive progress in innovation, And we won't stop there. MEDTRONIC Medicaid Services (CMS) has put into place and devise powerful solutions with proven is working with the global healthcare new financial incentives that reward the clinical and economic value as the basis community to leverage our skillsets to quality of care provided rather than the of our offerings and value proposition. develop and implement a comprehensive volume of care.

9 The Department of And Together, because we will forge portfolio of offerings across our businesses. Health and Human Services (HHS) has set a partnerships not only with providers, but Ultimately, this will help stakeholders goal of tying 50 percent of traditional, or with policymakers, payers and other new align value across the care continuum and fee-for-service, Medicare payments links in the healthcare chain to help our improve system performance, including to quality or value through alternative customers achieve their goal of delivering clinical care optimization, operational payment models, such as Accountable more seamless, integrated care across the efficiency and patient management.

10 Care Organizations or bundled payment healthcare continuum. arrangements by the end of While Enhancing technologies to optimize care this was thought to be highly aspirational, The main tenets of Further, Together focus and provide more value. For example, system leaders are seeing early signs that on applying our technologies, capabilities for all the good a pacemaker can do, if a it can be achieved in early 2016, HHS and expertise to align value among the patient experiences an infection from the announced that it had already met an interim various stakeholders in the healthcare implantation of the device, the positive goal of having 30 percent of payments tied system; creating meaningful innovations at effects of the technology can be mired by to quality or the therapy, procedural, and system level; serious medical complications.