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Medtronic, a US-based medical device manufacturer, has purchased Cardiocom, a patient-monitoring device maker, in a $200m all-cash deal.

The deal will allow Medtronic to work with hospitals and insurers in order to reduce the treatment costs of chronic diseases, such as heart failure and diabetes, and will enable it to provide affordable implantable devices.

Cardiocom produces products such as glucose monitors and weight scales, which help patients to diagnose their condition at home so that doctors can suggest remedial treatments.

Its products may get a fillip, especially in the wake of a new health-law rule, which punishes hospitals for high number of re-admission cases within a month of patients’ discharge, reports The Wall Street Journal.

Medtronic US president Mike Genau was quoted by the publication as saying that previously most firms paid more attention to the clinical value of the device.

Although that is still an important criteria, there’s also focus on how to reduce the costs of the system from cost-conscious hospitals, Genau added.

Medtronic plans to initially focus in the area of heart-failure as it has been manufacturing implantable heart-rhythm devices for several years now.

According to the firm’s estimates, the country spends approximately $40bn annually to treat heart failure cases and most of these are on hospital care.

"The deal will allow Medtronic to work with hospitals and insurers in order to reduce the treatment costs of chronic diseases."

While heart failure devices have been a key growth area for Medtronic, its implantable devices are priced above $30,000 and only around 13% of the approximately eight million patients receive these devices.

The acquisition of Cardiocom will enable Medtronic to cater to this wider segment of heart-failure patients.

In addition to heart-failure cases, Medtronic is targeting other disease areas such as diabetes, as part of its plan to provide wider services.

According Genau, the company may make additional acquisitions, which could boost the value to the Cardiocom purchase.

In 2010, Cardiocom had a share of 13% in the patient home-monitoring services market, according to research firm Frost & Sullivan.

The home-monitoring market could grow from $182m in 2012 to $395m by 2017.

Image: Medtronic corporate headquarters in Fridley, Minnesota, US. Photo: courtesy of Bobak Ha’Eri.