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Interview of the Week: Fernando Oliveros, Medtronic



Interview with Fernando Oliveros, Vice President of Medtronic Mexico

Q: Mexico has historically played an important role globally as a production hub for devices – how would you characterize the local market for medical equipment, beyond the maquiladora production legacy?
A: First of all, Mexico has not been playing the role it should until now. Considering the size of the Mexican population and despite the country being a large manufacturer of medical devices, the level of penetration nationally is still quite small. Nevertheless, the market for medical devices is becoming more important and represents an opportunity for Medtronic to close existing gaps in the commercialization and manufacturing process. We will be investing significant amounts of money in the next couple of years to enhance the role medical devices play in the continuum of care, including education, prevention, diagnosis, treatment, and post-surgery. To contribute to the growth of this segment, we are not only bringing new medical device to Mexico, but also connecting the dots in the care process. In doing this Mexico will hold a more strategic position for us in Latin America. Our aim is to double the size of our revenues within three to five years in the country, however this can only be achieved in an integral way, meaning more collaboration is needed between companies, government, hospitals, and patients.

Q: Recent budget cuts to the sector would seem to indicate that healthcare remains a secondary priority in terms of the national economic growth agenda – would you agree and does this constrain the growth potential for the devices sector?
A: Mexico is spending only 6.2% of the GDP on healthcare and half of that is out of pocket. Despite having a long way to go to improve this figure, I think current budgets and expenditure can be optimized to deliver treatments more efficiently. Companies need to collaborate with the government in important areas such as diabetes and cardiovascular care. We need to understand that there is no single actor that could come up with a solution for this problem alone, and this is why the new message we want to get across following our fusion with Covidien is “further together”. The challenge for companies today is to create dialogue and collaborate with the government in order to find ways to provide better care together. It is also crucial to understand the role that innovation plays in streamlining costs in the medium to long term. We need to change our mindset and become more responsible when in comes to healthcare investment as a combined challenge to do things better. In this way, the market for medical devices could duplicate or triplicate.

Q: How should models such as shared risk and pay for performance be utilized to optimize budgets in healthcare institutions?
A: These models can be quite effective as long as they are implemented in a collaborative way. In the case of diabetes, despite representing a significant investment to government, percentage of people achieving metabolic control is around 5-15%, and more can be achieved with the same amount of money but with a different approach. The government could certainly increase access and improve control if budgets were optimized. Once again, this can only happen if there is true collaboration. Implementing shared risk models should not be seen as a transaction, but the parties involved should analyze existing problems and find solutions together. We are more than open and willing to work with models based on per capita expenditure, risk sharing, or guaranteed results. Integrated solutions also play a very important role in optimizing costs. For instance, we help hospitals reduce 60 to 75% of the amount of products they need as we offer integral solutions instead of having different suppliers for a specific procedure. Medtronic is working with integrators, which are relatively unique to Mexico and have had a very positive impact on the system. These integrators have already helped to increase efficiency in public institutions, and we want to work very closely with them to move one step forward together. Integrators have a lot of data and information that can be used to really improve healthcare outcomes in an institution. For instance, if a given product or technique proves to effectively decrease the rate of infection of a procedure, pay for performance can be a fair agreement between institutions and providers

Q: Where do you see Medtronic Mexico in the near future and how would you like to see the industry progress in the short term?
A: We are working so that Mexico plays a leading role in Latin America by expanding access to growth our revenues. To achieve this, we will launch new products and technologies, always keeping in mind their economic value and clinical outcomes. We will increase our capabilities to deliver products and valuable solutions for the public and private sectors, while we continue to expand our manufacturing capabilities, creating a hub for medical devices in Mexico. We want the medical devices sector to be as strong as the automotive and aerospace sectors in the country. The country needs to be able to capitalize on today’s opportunities in the sector, and stakeholders need to collaborate to attract investment and the necessary resources to grow at an accelerated pace. More importantly, healthcare should become a priority for the government and a motor for economic development, driving productivity and competitiveness to the country. It seems that the government is heavily focused on the oil and gas and automotive sectors today, nevertheless, there are companies like Medtronic employing 14,000 people in Mexico, and representing strong actors in terms of job creation and investment. We have participated in discussions on how Mexico can capitalize further in terms of being a medical devices manufacturing hub in the North of country, and I still think that more efforts can be made to truly help the government to understand the relevance of the sector.

This is an excerpt of an interview to be featured in Mexico Health Review 2016 – an annual publication to be launched on September 7, 2016 at Mexico Health Summit

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