Collaborative Culture of Innovation

At Medtronic, innovation reaches beyond our products. During fiscal year 2011, we harnessed technology to enhance customer processes, built internal capacity to launch new business models in emerging markets, established the Medtronic Clinical Research Institute, and led an effort to address industry challenges around innovation and collaboration by initiating a dialogue among stakeholders from all disciplines of U.S. healthcare.

We also invested more than $1.5 billion (approximately 10 percent of revenue) in research and development in fiscal year 2011, with about 20 percent of that designated for new patient populations.

Hospital of the Future

The Medtronic Hospital of the Future melds strategic customer partnerships with cutting-edge technology to improve quality of care, increase efficiencies and drive cost savings. Through integrated healthcare solutions, such as automated inventory management, interactive educational materials, and remote consulting via high-definition videoconferencing, our Hospital of the Future technologies will allow Medtronic to improve quality and efficiency of patient care.

Medtronic has three Hospital of the Future centers at our Mounds View, Minnesota, USA; Tolochenez, Switzerland; and Shaghai, China facilities, with another under construction in Galway, Ireland. The centers allow us to visually demonstrate our Hospital of the Future solutions with various stakeholders and gather feedback at a global level.

During 2011 Medtronic is launching several Hospital of the Future pilots at hospitals within the US, Europe, and China.  These pilots will continue to explore the implementation approach, solution requirements, and future business models.  During the pilots, we will set baselines and formally measure success criteria in order to guide decisions on the value that these solutions will bring to Medtronic, our customers and ultimately to patients.

Business Model Innovation

To address growing healthcare needs in emerging markets, Medtronic is dedicating both financial and human resources to increase the company’s internal capabilities to design, test and scale new business models, such as our Healthy Heart for All initiative in India, quickly and efficiently.

The company is creating innovative processes and systems to guide market research, idea generation, piloting, refinement and roll out, with the goal of increasing access to life-enhancing therapies in developing countries. As part of this commitment, we are opening an international Business Model Innovation department in our International Headquarters located in Singapore during fiscal year 2012.

Medtronic Clinical Research Institute

Confronted with a disrupted global economy, broad healthcare reform, government cost containment mandates, and an aging population, our stakeholders are driving significant changes in global clinical research.

In fiscal year 2011, we launched the Medtronic Clinical Research Institute (MCRI) to proactively address these changes, which will include new regulatory standards, expanded post-market surveillance, and comparative effectiveness research (see related story below).

Modeled after leading research institutes, MCRI leverages our size, scale and strengths which will generate product performance and clinical outcomes that advance global adoption of our therapies, and build relationships throughout the healthcare ecosystem, through relevant clinical evidence.

By examining a broad spectrum of factors, from clinical safety and efficacy to cost effectiveness, societal value, benefits and harms of alternative methods, and quality of care, MCRI will help improve delivery of care in both developed and emerging markets.

Please read our 2010 report to learn more about our approach to clinical trials.

National Dialogue for Healthcare Innovation

In the fall of 2010, Medtronic accepted a leadership role as co-chair of the National Dialogue for Healthcare Innovation (NDHI), an interactive forum where leaders from across all disciplines of U.S. healthcare work toward consensus on the issues affecting healthcare innovation and patient care.

Formed by the Healthcare Leadership Council, NDHI is a forum for candid, transparent discussions of medical innovation in the United States, its importance and the opportunities and challenges affecting its progress.

In its inaugural event in October 2010, the NDHI convened more than 100 leaders from government, academia, industry, payers, providers, societies, and patient and consumer organizations for a Summit on Physician-Industry Collaboration in Washington, D.C. Participants identified areas of consensus and alignment, as well as divergent viewpoints, on key issues surrounding physician-industry collaboration. The multi-stakeholder group agreed to work together with the NDHI to continue dialogue and engagement on the following:

• Guidelines and principles
• Education and outreach
• Improving innovation

Medtronic remains engaged in these activities through two working groups that are focused on activities to maximize trust and preserve innovation, both for the benefit of patients and for continued U.S. leadership in the healthcare industry.

Commitment to Principled Collaboration

In June 2010 Medtronic initiated voluntary disclosure of annual payments made to U.S. healthcare professionals and healthcare organizations (in excess of $5,000) for royalties and consulting services.

We also developed robust web-based tools, training and resources to further ensure our practice of principled collaboration.

The Principles, Standards and Approaches which guide our physician partnerships have continued to be refined and enhanced during fiscal year 2011. They include:

• an enterprise-wide procedure to assess the need for physician advisory services;
• a consulting agreement approval process;
• documented methodology for determining fair market compensation;
• high-level review and approval of any physician-services relationships* approaching a payment amount of $150,000;
• movement to a fixed fee compensation model for training and education events;
• restrictions on physician participation in clinical research for products on which they earn royalties;
• quarterly disclosure of aggregate annual compensation totaling more than $5,000 to U.S. physicians for royalties and all physician consulting services (excluding clinical advisory services); and
• a commitment to engage in ongoing dialogue with interested stakeholders regarding best practices.

* Physician-services relationships include training and education services, product research and development services, advice on clinical trial design and implementation, services related to advisory boards/committees and other consulting, services and royalties. In limited cases this limit may be exceeded after formal review and approval.

Visit the Physician Collaboration section of our corporate web site for more information, including links to our Physician Registry and Donations Registry.

For more information on our approach to innovation, please read our 2010 report.