How ResMed evolved to be a leader in out-of-hospital care software
For 30 years, ResMed has been associated with world-class devices for sleep and respiratory care. Yet, in the past decade, it’s transformed into a global leader in out-of-hospital care software. We had the chance to sit down with Michael “Mick” Farrell, CEO of ResMed, to learn more about how it all started and the journey that led this medical device company to enter – and help lead – the realm of digital health. Read the recap in this blog and learn more about Mick’s life and his passion for healthcare.
The founding story of ResMed and how it all started.
ResMed, market cap, recently reported their latest quarterly financial results delivering 9% year-over-year revenue growth (annual revenue of ~$3B), a 12% improvement in operating profit and 12% growth in earnings per share. Total return for shareholders over the past 3 years has been an amazing 160%. With such outstanding results, it’s clear this company has quickly become a leader in the industry. But, let’s look at how it all started.
In 1988, Mick’s father, Dr. Peter Farrell, was vice president of R&D for Baxter Healthcare in Asia Pacific—when Baxter decided to pull all R&D from Europe and Asia, and center all R&D only in North America. He notes, “My dad was like—we’re all smart people, we’re all going to get new jobs. But there’s a couple of projects here that are really exciting.” When Baxter decided to not pursue manufacturing CPAP devices, Dr. Farrell got together with a small group of investors and they bought the technology and rights to CPAP technology, which was invented by Colin Sullivan in 1981. Little did Dr. Farrell know; he would go from changing five lives in a research lab to transforming the lives of millions.
Why ResMed expanded its reach into SaaS offerings.
Some people might have been surprised to see ResMed dabble in the software space. But, as Farrell explains, “We’ve been in software since 1989. We’ve had embedded software inside our CPAP devices from day one. And when we created the first auto-titrating CPAPs, I think in 1991, we had embedded software that was doing closed feedback loops to look at your therapy and adjust pressure up or down automatically.”
By the early 90s, they got into external PC-based software that could take data from CPAP, devices, and help clinicians analyze that for patients. “We got into cloud data in the early 2000s,” Farrell says, “allowing us to analyze across multiple patient groups.” What this enabled was improved therapy adherence and individual coaching—ultimately helping to significantly lower the cost of setting a patient up on CPAP and improving adherence by 60%, according to peer-reviewed data from the mid-2000s.
The synergistic value propositions between ResMed’s core business and the out-of-hospital care space.
While it might not be obvious at first, there are many synergistic value propositions that exist between ResMed’s core sleep and respiratory business and their out-of-hospital software business. Farrell says, “It not only enhances the ResMed brand to be a hardware provider, but also a software solutions provider.” He goes on to ask, “In skilled nursing facilities, home health or hospice, private duty home care, life plan communities, senior living—how many undiagnosed and untreated sleep apnea patients, COPD patients, and adult-onset asthma patients are in those populations?”
“It’s an incredibly high opportunity,” Farrell continues. “It’s a value-added service that will really help as we screen for many chronic diseases, including sleep apnea and COPD.” Ultimately, these synergies will help ResMed’s core business continue to grow, but it’ll also help people running a business across a senior care facility or a home-based care organization because untreated sleep apnea patients or untreated COPD patients in your population are going to be frequent fliers back to the hospital.”
To watch this interview or listen to the podcast episode, explore the links below—and learn more about ResMed’s out-of-hospital care solutions.
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