"You are not going to get paid for cool ideas," IntelliDOT CEO and founder of CardioNet James Sweeney told a group of wireless health entrepreneurs at the Wireless Life Sciences Alliance event last month. "You are not going to get paid for saving lives. You are not going to get paid for anything unless you can prove that you can save them money."
Sweeney's words clearly still echo in the halls of CardioNet's Conshohocken office building. The company just announced a more modest outlook for its full 2009 fiscal year because it anticipates lower commercial reimbursement rates for its MCOT wireless remote monitoring for cardiac arrhythmias technology. The company expects revenues for the year to be in the range of $156 million to $160 million now instead of its previously predicted $170 million t0 $175 million revenue range.
"In the world we're moving into, more than ever, if you can't justify the cost benefits, then you will fail," Sweeney told the crowds at WLSA. "In my view, getting the FDA's approval is not nearly as hard as getting the CPTs and insurance reimbursement approvals."
CardioNet can certainly claim wireless health pioneer status for getting a CPT code and gaining reimbursement approvals, but anyone who has played classic video games knows the pioneer's trail is fraught with countless obstacles. Maintaining reimbursement dollar amounts is clearly one of them.
"CardioNet intends to continue its previously announced investments in its sales and marketing organization, product development and clinical research programs," CEO Randy Thurman said in a statement. "Other areas of spending will be curtailed and restructured."
Financial blog PhillyDeals wondered: What's left to cut after sales, marketing, product and research? (Maybe future acquisitions?)
"[CardioNet] just completed training for its expanded sales organization and expects to have over 140 experienced cardiology account executives fully deployed beginning in the third quarter of 2009," Thurman said in a statement. "CardioNet believes this will be the largest sales organization in the world dedicated to wireless healthcare. The second half of the year will also be marked by the company's entry into the hospital and cardiac thoracic surgery markets."
Other wireless health start-ups looking to follow CardioNet's trail, listen up: Once you have sorted through the increasingly complicated regulatory framework in this emerging industry you have the reimbursement kerfuffle to look forward to. If Sweeney is to be believed, the second is the road less travelled by, but it could make all the difference.
