About two weeks ago, remote patient monitoring (RPM) vendor Validic acquired the assets of fellow RPM vendor Trapollo from Cox Business, a subsidiary of telecoms and automotive retail company Cox Enterprises.
The deal, the value of which is undisclosed, brings together what Validic claims is the world’s largest health Internet of Things (IoT) platform with Trapollo’s high acuity-focused platform and impressive logistics background.
The acquisition is the next logical step in a relationship between the two vendors that goes back to 2019, when they embarked on a strategic collaboration offering hardware and software services supporting RPM.
Validic says purchasing Trapollo’s assets will ‘round out’ its core capabilities.
The Signify View
Established in 2010, Validic’s origins are in consumer wearables tech. In 2015 it modified its platform for healthcare providers and payers, and nearly six million people are now connected to the Validic platform in the US. The vendor also supports what it claims is the largest RPM programme in the country for managed care consortium Kaiser Permanente, with more than 300,000 patients enrolled since it was established in 2010. Validic says that, overall, its platform includes more than 530 supported devices, and is available as a standard integration in Epic’s Connection Hub, Oracle Cerner’s Millennium and other EHRs.
Trapollo, meanwhile, began life in the same year as Validic as a pure logistics solutions provider to large health payers as they started to roll out virtual care solutions. The company’s position in this respect was significantly strengthened in 2015 when it was bought by Cox Business. Trapollo subsequently moved into RPM, chronic care management and hospital-at-home.
Up the Value Chain
To date, Validic’s business has largely been in either so-called ‘bring your own everything (BYOE)’ or ‘bring your own device (BYOD) RPM programmes. BYOE programmes can integrate with more than 530 devices that can be supplied by either the healthcare provider or patient. These are aimed at large-scale RPM programmes for chronic condition patients with low to moderate risk of near-term hospital admission. This accounts for the majority of lives managed on Validic’s platform, and offers the greatest scope for scaling.
Under the BYOD model, Validic supplies from a smaller selection of devices, using the patient’s smartphone as a hub. Again, this is offered to low-to-moderate risk patients suffering from one or more chronic conditions.
However, the company has been much less successful in selling higher value, higher acuity solutions. This is where higher revenues can be achieved as healthcare providers pay a premium per patient for support via the platform. In buying Trapollo’s assets, Validic is now well positioned to make inroads in this area too.
Limited Elbow Room
Despite the implied benefits of the acquisition – and notwithstanding the fact that the lower end of the RPM market is still extremely fragmented with few vendors yet able to scale across borders – medium-sized players like Validic find themselves in a space with limited elbow room.
Consolidation is happening, and the Trapollo acquisition follows fellow ‘medium-sized’ RPM vendor Clear Arch Health’s acquisition last year of Resideo Technologies, and Best Buy’s acquisition of Current Health in 2021.
Philips, which at one point looked like it was distancing itself from the RPM market, entered a strategic collaboration with BioIntelliSense in 2020 to support the remote monitoring of at-risk patients from the hospital-into-home. In the same year it acquired BioTelemetry which, as well as servicing the ambulatory diagnostic cardiology market, was also growing its RPM business via BioTel Care (further details on Philips RPM strategy in this insight). And high acuity telehealth vendors like Teladoc, Amwell, AMD and GlobalMed are said to be eyeing partnerships with RPM vendors to round out their portfolios beyond high acuity inpatient care and into the home.
When Acquisition Alone is Not Enough
As such, acquisition alone will not be enough for medium-sized vendors to grow. Scale is central to success going forward and, in a crowded US market, for many that will mean scaling internationally. With non-US markets also highly fragmented with a fiercely competitive ‘race to the bottom’ still taking place, overseas success is neither immediate, nor a given.
Validic is fortunate in that it has other potential routes to scale in the US. Its existing contract with Kaiser Permanente is one such pathway. Kaiser and regional care provider Geisinger Health System last month launched Risant Health, whose mission is to sell value-based care (VBC) solutions to large community health systems. Its launch is being billed as accelerating VBC adoption in diverse, multi-payer, multi-provider and community-based health system environments. These health systems – Risant’s customers – are a rich potential source of business for Validic, which also has sizeable contracts with Mayo Clinic, ChristianaCare and Prisma Health.
Another promising route forward for Validic is the US ‘hospital-at-home’ market, a notoriously complex space compared to low acuity chronic care management with a number of barriers to entry (ongoing concerns over the status of reimbursement structures beyond 2025 being one).
Validic’s hand in this market is again strengthened with the acquisition of Trapollo, whose existing hospital-at-home programmes focus on non-critical patients and are mainly within integrated delivery networks (IDNs) that increasingly use VBC rather than fee-for-service models. But, again, this is a competitive arena, where the likes of provider Atrium Health (which recently teamed up with Best Buy Health to develop a new ‘hospital-at-home’ service in the US), Health Recovery Solutions, CareSimple, Connect America, AMC, Contessa Health and Amedisys are all battling for share.
The Trapollo acquisition raises questions beyond how vendors can scale and evolve in the current market. One question is Validic’s apparent strategic about-turn. Signify Research spoke to the vendor last year as part of research for our RPM World 2022 report, and at that time they were still pushing the ‘low touch platform’ message. At the time they claimed they were neither looking to be a full patient engagement solution, nor a full digital front door, nor trying to duplicate EHR functionality by providing video consultations, patient education or clinical documentation (as many RPM vendors now do). The Trapollo acquisition appears to contradict this.
It is also worth mentioning here what Trapollo stands to lose in its acquisition by Validic: not least access to growth funding from Cox and a footprint across all 50 US states, including in remote areas where RPM really comes into its own. Cox Business also has an established customer base of more than 260 hospitals. It is not clear at this stage whether Trapollo will retain any relationship with Cox, or whether it will lose all leverage over those much-coveted supply chain networks.
Regardless, Validic still sees Trapollo’s logistics expertise as a USP post-acquisition. In the media release announcing the deal, Validic stressed how device logistics would support the full range of personalised care programmes, from BYO-tech, low-touch programmes to high-risk, high-touch and fully kit-based RPM.
Completing the Missing Link
Overall, therefore, Validic’s decision to buy Trapollo’s assets makes business sense. Trapollo’s expertise in high acuity completes the missing link in Validic’s offering, while both companies’ alignment with the growing VBC movement in the US is smart.
And while it is unclear to what extent Trapollo will lose its competitive advantages around logistics as its eight-year ownership by Cox ends, Validic still sees this as a key differentiator, and pivotal to scaling, going forward.