The problem with CardioNet

The problem with CardioNet

Summary: CardioNet is focused more on Washington than on Silicon Valley. It's making the classic mistake of thinking more about its business model than the customer experience.

TOPICS: Health, Apps, Hardware, Wi-Fi

I'm a big fan of remote heart monitoring.

I have been calling this a "killer app" for remote applications since 2003. I spoke about the promise of such solutions at Stanford in 2004. I fully expected that the market would be large and growing by now.

Instead the market is at a point of crisis.

CardioNet, which has been trying to commercialize constant wireless heart monitoring for a few years now, is at a five-year low, and falling, because it can't get insurance reimbursement for its system. (Picture from CardioNet.)

The latest "no," from United Healthcare, seems especially discouraging. The insurer calls CardioNet's solution "unproven," preferring LOOP systems that are used intermittantly, when a patient feels the need for monitoring.  

It's a distinction without a difference to the insurers, but it's a major difference if the patient has an active lifestyle. My late journalism teacher, Richard Schwarzlose, was riding his bike when he suffered his fatal heart attack. He needed something that could record his condition, in real time. Something he could wear comfortably.

For Medicare, CardioNet is "carrier-priced," meaning reimbursement rates are set by local payment outfits. Highmark CMS, a northeastern payor that had been covering CardioNet, cut its reimbursement rates dramatically last year, leading to a freefall in the stock.

The problem, as its then-CEO said, was that CardioNet could not survive with the new rate, about $750 per patient.

That's where I have a problem. Technology costs continue to fall. Carrier costs can be reduced by using text messaging. To me, the CardioNet solution is overly complex, and the company is too focused on the insurance industry.

New CEO Joe Capper is expected to look at other verticals, like diabetes, rather than looking at his base technology.

As seen in the illustration, it's a pretty complex deal, with three EKG leads wired to a box worn around the neck, which in turn is linked wirelessly to the phone.

That's a lot to wear. It should be possible to reduce this to a patch worn close to the heart, and a smaller monitor worn on the wrist, which can carry a heart-rate monitor on it and support Zigbee to the heart and a WiFi chip connected to a smartphone app.

CardioNet, in other words, is focused more on Washington than on Silicon Valley. It's making the classic mistake of thinking more about its business model than the customer experience.

As a result, I think it is still missing a mass market opportunity. So is everyone else.

Topics: Health, Apps, Hardware, Wi-Fi

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  • Thats why the free market is great

    Thats why we NEED a free market in health care vs a socialist one like the current Administration wants to keep in place. The free market will weed this type of thinking out. Once they see the writing is on the wall they may change their tune and modify it to be "consumer friendly" - but until then, dont count on it.
    • The current admin? Are you kidding?

      It was the mess that Nixon started with this nickel-and-dime-my-health-for-profit approach that causes this. Get your facts straight!
    • Socialism?

      @JT82 "Free market" and "socialism" are not the issue here. Not at all. Is insurance "socialism?" I really thought it was a product of the market. And it's insurers who are resisting what this company brought to the market. Medicare -- the "socialists" -- were willing to accept it -- albeit at a price lower than the maker wanted.

      And I personally think Medicare had a point. I think CardioNet is selling 10 year old technology. I think a more modern solution can be implementable for whatever insurers want to pay -- and have enough value that private payers will also want it.

      Limiting your view of the market to those who are under hyperactive heart care was their mistake.
  • And how is this Microsoft's fault?

    Oh, I'm sorry, you didn't blame it on MS or proprietary software this time.

    My Bad. :(
    John Zern
  • Customer focus

    Classic business error.
    Successful companies will always keep the primary focus on the customer. The stock market will screw you and so will the insurance company and the government, if you let them.
    Better service, lower cost, more usable features, and reliability. Why is so hard to understand?
    • RE: The problem with CardioNet

      @lars626 Because most business models follow the money, rather than following the value. This is especially true in health care.
  • Cardionet monitor

    After receiving the monitor, I carefully read the 6-page legal contract & immediately took exception to the many phrases....'you are financially responsible for....". I emailed the company which did make some concessions, but would not send me a revised agreement.
    Therefore I packed up the box & returned it. I was NOT going to get involved with a company that was so 'pro-company' and AGAINST the consumer!