Minnesota is home to the operations headquarters of the world's largest medical technology company, the nation's biggest health insurer and one of the world's premier academic medical centers in Medtronic, UnitedHealth Group and the Mayo Clinic.
Historically they have worked as adversaries, because that is how the U.S. health care system is set up: technology companies extract the highest prices they can from hospitals, which in turn negotiate the best rates possible from insurers. The tension has only ratcheted up amid fears about runaway health care costs.
This week will see the Minnesota-based CEOs of Medtronic and Mayo join the chief medical officer of UnitedHealth Group on one stage at the Minneapolis Convention Center to address a crowd of thousands of health care executives and entrepreneurs from around the world at the medical-technology industry's premier national conference, AdvaMed 2016.
"Everyone agrees that improvement in health outcomes and lower overall costs are an absolute mandate for the government, for the [device] industry, for payers and providers," said Shaye Mandle, CEO of Minnesota's med-tech trade group, the Medical Alley Association. "That will be one session that will get to the heart of … trying to get the various players in health care to sit down and talk about how collectively some solutions might be reached in a way that leverages the expertise and strengths of every sector."
AdvaMed 2016 is a three-day industry conference starting Monday, with the three top executives appearing at 7:30 a.m. on Tuesday. Not all the sessions will dwell on lofty concepts and macroeconomics, and some of the most important interactions may actually happen over coffee.
"What you have in Minnesota is the opportunity for executives like Omar Ishrak at Medtronic to be rubbing shoulders with the guy or the woman who is starting up the newest cutting-edge technology in Plymouth. That's what I'm getting at when I talk about the power of the ecosystem we have," said Lt. Gov. Tina Smith. "We think about Minnesota's Medical Alley as a specific place, but in some ways, it is a state of mind."
Plymouth is a northwestern metro suburb of 80,000 people that is home to a dense concentration of small, medium and large med-tech companies and manufacturing sites, from Mardil Medical to Creganna Medical to Smiths Medical. More than 600 medical device companies dot the Twin Cities metro and the state.
Why Minnesota? The story is well-known — in fact it's on display in the Smithsonian American History Museum's "Places of Invention" exhibit. It begins 58 year ago, with a chance assignment from pioneering University of Minnesota heart surgeon Walt Lillehei to the budding Minneapolis entrepreneur Earl Bakken to create a cardiac pacemaker that could work on battery power instead of being plugged into a socket.
"After only four weeks of experimentation and work, the world's first wearable, battery-powered, transistorized cardiac pacemaker saw its first clinical application and began saving lives," Bakken wrote in his autobiography published in 1999, the year Lillehei died. Today, the University of Minnesota has a research institute named after Lillehei; Medtronic co-founder Bakken received AdvaMed's Lifetime Achievement Award in 2014.
The state of Minnesota has worked to maintain the health care cluster that Bakken and Lillehei started. Those efforts include infrastructure improvements like Hwy. 610 in Brooklyn Park, which has attracted health care companies, and the state's ongoing Angel Tax Credit fund that encourages private investments in Minnesota high-tech start-ups. The Medical Alley Association was formed in 1984.
Such efforts have not always succeeded in keeping the biggest companies. Medtronic relocated its legal headquarters to Ireland last year while keeping executives' offices here. The biggest med-tech company still headquartered in the state, St. Jude Medical, is being acquired by Chicago-based Abbott Laboratories. Boston Scientific derives two-thirds of its revenue from business units based in Minnesota, but it chose to stay in Massachusetts when it announced construction of new world headquarters in 2012.
On the other hand, major device makers Smiths Medical and Coloplast both chose to build new global headquarters in Plymouth and Minneapolis, respectively. And industry boosters note the importance of the ecosystem of start-ups and medium-stage companies that benefit from the educational, legal and marketing networks that have grown up around the state's med-tech, insurance and health care industries.
"The health care sector of our economy is going to grow. That is assured," said Gov. Mark Dayton. "To be one of the meccas for medical technology is just phenomenally valuable for our future, already for our economy, and will continue to become even more so."
