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How can you create a business model that unlocks an unserved market?

Heart disease is the number one killer in India, accounting for a quarter of deaths among those aged 25 to 69.  Millions are dying due to lack of access to treatments.  Medtronic, the world's largest maker of medical devices, called on Innosight to create a new business model that would expand access to technologies such as implantable pacemakers.

Medtronic    Healthy Heart For All

Across India, a nation of more than a billion people, heart disease has been spreading fast, with some studies estimating that India now accounts for 60% of the world's heart disease.  In a country where most people do not have health insurance, only a tiny percentage can afford proper cardiac care.

As the world's leading maker of medical devices, Medtronic established a presence in India thirty years ago.  But to reach the masses of people who are unable to obtain pacemakers and other cardiac products, the company needed a breakthrough not in technology but in a new business model.  Compared to the U.S., where about 750 out of every million people have implantable pacemakers, that figure was only about 7 people in India.

Identifying barriers

In 2008, the head of Medtronic's international arm tapped a business development director named Keyne Monson to marshal Medtronic's vast expertise and resources to meet the challenge.  Monson launched the effort without a single direct report and called on Innosight to help innovate a business model adapted to local markets.

The engagement began with several months of field research into the patient treatment cycle.  The Innosight team visited hospitals and care facilities, interviewing more than 100 physicians, nurses, hospital administrators and patients across the country.

The research turned up four key barriers preventing patients from receiving much-needed cardiac care: 1) Lack of patient awareness of health and medical needs, 2) Lack of proper diagnostics, 3) Inability of patients to navigate the care pathway, and 4) Affordability.

Designing the business model

The team was inspired by the few existing low-cost, high-volume medical care models for the developing world, such as the Aravind eye surgery clinic.  But to blueprint a business model for cardiac care in India, they needed to create an entirely new ecosystem from scratch.

We helped Medtronic build a model based on four building blocks: 

  • Go direct-to-patient: reach out through a toll-free hotline posted on billboards, ads on trucks, in social media and text messaging, inviting patients to free diagnostic events.
  • Develop the ecosystem: engage industry stakeholders to raise awareness and drive participation in the program.
  • Manage the pipeline: set up screening camps leveraging telemedicine technologies such as wireless relay of ECG results and other tools that directly identify patients.
  • Ensure affordability: create the first-ever consumer financing plan for pacemakers.

The business model became the basis for the new "Healthy Heart for All" initiative.  The service was introduced in 2010 through a press conference and a medical trade show, drawing immediate interest.  We launched the first pilot program at The Mission Hospital in Durgapur, which serves a population of tens of millions in India's northeast corner, near Bangladesh.

Saving lives

Healthy Heart's first implant occurred in September 2010.  A 44-year-old mother and widow named Angurbala was suffering from blackouts and other symptoms of acute heart disease.  Her family income was about $65 per month, and a monthly payment was set to fit her budget.  After her procedure, she said, "If it weren't for this program, I would not be alive today."

Over the subsequent 18 months, pilot programs in a handful of hospitals screened thousands of patients who previously would not have been diagnosed, let alone treated.  That provided vital in-market learning for re-vectoring and refining aspects of the business model.

Driving results in the market

Though the total number of implants is still relatively small compared to the total unserved market, the pilots have demonstrated the model's promise. In 2012, the Healthy Heart for All venture screened 20,000 people and implanted pacemakers in 2,000 of those patients.

"These pilots have been incredibly successful," said CEO Omar Ishrak, in a recent earnings call with analysts. "The hospitals in these areas have already seen a 2x improvement in revenue." Medtronic is now expanding Healthy Heart for All to hundreds of additional sites across India and then to other emerging economies. "We're scaling it up very rapidly," Ishrak said in early 2013, "to the point where this becomes the default business model, the core of how we deploy cardiac therapies in India."

While only accounting for 10% of Medtronic's revenue, emerging markets is now one of the fastest growing parts of the company.  What's more, the business model innovation methods developed in partnership with Innosight have now become a corporate-wide capability.

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Omar Ishrak
CEO, Medtronic

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