Medtronic PLC has quietly signed up more than 140 U.S. hospitals and clinics in a program that aims to cut infection rates in heart devices using its innovative dissolvable surgical envelopes and rebates.

Replacing heart devices that have become infected is estimated to add more than $1 billion in expenses to the U.S. health care system each year. Minnesota-run Medtronic sells a relatively low-cost infection-fighting device called the Tyrx Antibacterial Envelope, which is wrapped around a pacemaker or defibrillator and implanted in a patient's chest along with the machine. The envelope dissolves in weeks, releasing antibiotics into the pocket around the heart device.

Medtronic has grown so confident in the Tyrx envelope's ability to reduce infection rates that the company is signing "risk sharing" agreements with health care providers that say the company will pay a substantial rebate toward the $50,000 cost of removing an infected Medtronic device and implanting a new one, if a Tyrx envelope was used in the original surgery and an infection sets in anyway. Infection rates are low, but rebates have been paid out already.

Hospitals are taking notice — including 13 in Minnesota that have signed up.

Michael Coyle, president of Medtronic's $10 billion cardiac and vascular device group, told investors last month that the Tyrx program has helped Medtronic gain market share in the competitive field for devices that use electricity to make the heart beat in regular rhythm.

"A [hospital] account can actually get, if you will, insurance on a patient coming back with an infection. We will make a major payment to help offset the cost of the infection," Coyle said in a May 25 earnings call, "but that's only available [if] they are actually using the envelope on a Medtronic device. So that has actually resulted in a pretty big spike to percent increases in the number of devices that are going in on competitive leads."

Leads are the wires that run from a pacemaker to the heart, and "competitive leads" are those made by a rival manufacturer. Doctors often choose to leave the original leads in place and just swap in a fresh pulse generator during surgery, since many leads are compatible across brands.

That means the doctor and patient can pick a brand every seven to 10 years — a decision point where Medtronic is trying to use the Tyrx envelope to gain an economic edge, while addressing an expensive public-health problem at the same time.

The Tyrx risk-sharing program is an example of the growing move toward "value-based" health care, in which payments may vary depending on patient-safety performance and overall efficiency.

In value-based arrangements, the success of a deal is judged by its ability to lower costs at the overall population level, rather than the performance in any individual surgical case. In the medical device context value-based deals typically involve manufacturers sharing the financial risk for bad outcomes. Hospitals welcome the chance to have a partner sharing financial risk, and device makers are eager to be seen taking steps toward better and more-efficient care.

Last year, Michigan-based orthopedics device maker Stryker announced a program called the SurgiCount Promise, in which Stryker's specialized bar code system for tracking its surgical sponges during procedures is backed up by a promise of $5 million in product liability indemnification if a sponge gets left in a patient. The company estimates that surgical sponges left inside patients add more than $2 billion in cost to the health care system each year.

Other device makers that have implemented risk-sharing agreements based on long-term performance include New Jersey-based Johnson & Johnson and St. Jude Medical.

Medtronic is developing a number of such programs. Its heart-device infection prevention program is aimed at reducing the more than 6,000 U.S. patients who are affected by device infections each year, CEO Omar Ishrak said recently.

Infection rates vary

Infection rates for pacemakers, implantable defibrillators and cardiac resynchronization therapy (CRT) devices vary. But in general, doctors say, more complex devices like CRTs are more prone to infections. So are replacement devices, which are placed in the fibrous "capsule" of scarlike tissue that formed around the original device, where the tissue has a much harder time fighting off infection.

"The doctors and hospitals do their level best," to prevent infections, said University of Minnesota cardiologist Dr. David Benditt. "Even given that, we see infection rates with [replacement] devices in the 3 to 4 percent range. That means for every 100 redo devices you put in, three or four get infected."

Benditt, who is paid by Medtronic and other companies for speaking and other services, said the cost of using Tyrx envelopes in higher-risk heart device patients will be quickly recouped if a hospital can prevent even a couple infections per year. Medtronic declined to disclose the price of Tyrx envelopes; Benditt estimated that the device adds several hundred dollars to a surgical procedure that can cost more than $30,000.

Medtronic has run several studies to gauge the exact risk-reduction created by Tyrx. The most recent study report, published last month in the journal JACC: Clinical Electrophysiology, found about 80 percent fewer infections in patients who received a Tyrx device compared to those without (0.4 percent vs. 2.2 percent). But that was a non-randomized study examining an older version of the Tyrx device. A large-scale prospective randomized trial that aims to collect 12-month outcome data on more than 7,000 patients at 225 hospitals is well underway.

Although Medtronic is already betting real money that the device will pay off by cutting infections, doctors say the true benefit will remain an open question until the hard data are in. Dr. Suneet Mittal, an electrophysiologist and researcher at Valley Health System in New Jersey involved in Tyrx studies, said the earlier observational studies suggest Tyrx has a clear value in reducing infections.

"This has led the way to a really well-designed, well-powered randomized clinical trial," Mittal said. "What I'm hoping for is that one way or another, we will know what the role is. Because we as practitioners are all trying to keep our infection rate as close to zero as possible."

Joe Carlson • 612-673-4779