Medical device major Medtronic plc (MDT Quick QuoteMDT - Free Report) recently announced the launch of Medtronic Orthopedic Solutions, a comprehensive offering for total joint replacement episodes of care. The product has been designed to reduce the high costs associated with hip and knee replacements along with an aim to improve patient outcomes. It specifically addresses the recently implemented Comprehensive Care for Joint Replacement (CJR) model by Centers for Medicare & Medicaid Services (CMS) – a bundled payment initiative that holds around 800 hospitals responsible for the quality of care they deliver for hip and knee replacements.

This new Orthopedic Solutions business is claimed to offer a consultative program to assist providers in meeting CJR requirements. While addressing patient satisfaction and outcomes, it will support providers from pre-surgical planning through the 90th day post discharge. Additionally, Medtronic is set to introduce a value-based total knee arthroplasty system at the American Association of Knee and Hip Surgeons Annual Meeting (AAKHS), which is currently taking place in Dallas. The FDA-cleared knee implant will be widely available in the first half of 2017.

Management noted that the company has partnered with physicians to create the range of Orthopedic Solutions which include care pathways, patient monitoring with Medtronic care management services, the total knee arthroplasty system and bleeding control with the company’s Aquamantys system.

CMS is currently emphasizing on hip and knee replacements as these are the common inpatient procedures and often require lengthy recoveries. CJR model strives to improve patient care by encouraging hospitals, physicians, and post-acute care providers to work together to improve the quality and coordination of care from the initial hospitalization through recovery and financially rewarding hospitals for providing cost effective and high quality care, while levying penalties for poor outcomes.

As per a Research and Markets report, the global knee and hip replacements market is estimated to exhibit a CAGR of over 5.15% during 2016–2021. With rising per capita healthcare, we believe Medtronic aims to adopt value-based healthcare and offer affordably better implants in orthopedics by helping hospitals cut down costs while improving patients’ lives. In the last reported quarter, the U.S. spine business witnessed mid-single digit growth. Medtronic also obtained two-level FDA approval for its Prestige LP which is expected to drive adoption of cervical disk arthroplasty procedures in the U.S. We also expect the company to report better results from the Medtronic Orthopedic Solutions business under the Spine division (within Restorative Therapies Group) in the forthcoming quarter.

Zacks Rank & Key Picks

Medtronic currently carries a Zacks Rank #3 (Hold). Better-ranked medical stocks are Nxstage Medical Inc. , Baxter International Inc. (BAX Quick QuoteBAX - Free Report) and Bovie Medical Corporation . GW Pharmaceuticals and Baxter sport a Zacks Rank #1 (Strong Buy) while Bovie Medical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nxstage Medical surged 34.2% over one year compared to the S&P 500’s 6.9% over the same period. The company has a four-quarter positive average earnings surprise of 50.00%.

Baxter international rallied 24.6% in the past one year, comparing favorably with the S&P 500’s 6.9%. It has a trailing four-quarter average positive earnings surprise of 27%.

Bovie Medical recorded a 103.6% gain in the past one year, way better than the S&P 500’s 6.9%. The company has a trailing four-quarter positive average earnings surprise of 28.7%.

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