Last month, patient monitoring device vendor Spacelabs Healthcare acquired predictive analytics technology firm PeraHealth. The deal offers Spacelabs impetus in a market where early-warning solutions alerting clinicians to patient deterioration, and that help reduce in-hospital mortality and unplanned transfers to the ICU, are in high demand.
The Signify View
The acquisition will look to address hospitals’ pressing needs to reduce costs in both a challenging economic environment that is squeezing healthcare budgets, and amid the ongoing shift towards value-based care (VBC) in the US.
One way to do this is to move patients, where possible, out of high-cost care settings like the ICU into step down and general wards. But in doing so there is a clear risk of the patient being re-admitted to the ICU should their condition deteriorate. Tools that can predict or detect deterioration in a patient’s condition and prevent this costly eventuality is a potentially valuable weapon in a hospital’s armoury. This is especially true in the US where, against the backdrop of VBC, hospitals are ever more liable for care provision. Reimbursement funding is at risk if patient care falls below the standards expected.
Three Routes to Market
In response to this trend, an ecosystem of analytics start-ups is vying for share in a highly competitive space, and three clear routes to market have since emerged for these firms.
Analytics and AI-Based Applications in Clinical Care (Source: Signify Research). Note this is not a comprehensive list and just provides example vendors
Acquisitions by monitoring device vendors is one attractive route to market for analytics firms given strong demand for additional analytics tools that support the provision of patient monitoring. Other routes are to sell direct to the hospital – a challenging prospect in a very competitive space – or acquisition by other IT vendors. The Spacelabs acquisition of PeraHealth is a good example of the first route, and this draws parallels with Japanese vendor Nihon Kohden’s August 2021 acquisition of algorithm and software developer Advanced Medical Predictive Devices, Diagnostics and Displays (AMP3D). The technology developed via the acquisition has helped Nihon Kohden further compete with other patient monitor powerhouses such as Philips, GE Healthcare and Mindray.
With a 3.0% global market share Spacelabs is the world’s seventh-largest patient monitor vendor (behind Philips, GE HealthCare, Mindray, Nihon Kohden, Hill-Rom (Baxter Healthcare) and Draeger Medical). However, it has established a solid customer base for its monitoring devices offering in the ICU, step-down and general wards.
PeraHealth’s sepsis detection solution substantially elevates Spacelabs’ value proposition and deepens its portfolio which includes multi-parameter monitors, central stations and cardiac telemetry devices. In 2021, multi-parameter devices accounted for most of Spacelabs’ revenues.
However, sepsis is the leading cause of death from infection, accounting for one-fifth of deaths worldwide, and there is significant focus in health systems on monitoring at-risk patients. Claiming to offer the only FDA-cleared predictive analytics solution of its type, PeraHealth says it offers clinicians ‘a visual dashboard of a patient’s condition in real-time, helping them detect changes before they become life threatening.’ By incorporating the technology into its wider portfolio Spacelabs has ensured it has the capability to meet the growing interest in solutions that can reduce adverse events.
PeraHealth’s respected ‘Rothman Index’ early warning system (EWS), used to predict cardiac and pulmonary arrest deterioration and mortality, is also attractive in the hospital market. Hospitals’ own early warning protocols are often manual, and so interest in automated early-warning systems that flag patient deterioration is rising with mounting pressure on stretched hospital staff. With the Rothman Index under its umbrella, Spacelabs joins the likes of Philips IntelliVue Guardian Solution, Capsule Technologies’ Early Warning Scoring System (EWSS) and Bayesian Health’s Targeted Real-Time Early Warning System (TREWS), an AI-powered solution shown to reduce mortality from sepsis by 18%, in having an in-house solution.
Although currently viewed by healthcare professionals as a ‘nice to have’, interest in analytics is increasing with the realisation that healthcare providers are increasingly under strain from increased hospital admissions and fewer caregivers. Device vendors that fail to acquire, or develop their own, analytics solutions risk being left behind.
ICU Still the Focal Point
Although non-ICU settings are beginning to assume greater importance for analytics vendors the ICU remains the key market driver and a focal point for them. CLEW Med and Ambient Clinical Analytics are just two vendors that were launched on the premise of strong demand for physician ICU support during the COVID-19 pandemic, when staff and clinical resources were stretched to the limit. Despite the cost-motivations in shifting patients to step-down and general wards, both monitoring device and analytics vendors until now have largely focused on the ICU. Philips says 99% of its remote clinical surveillance still happens in the ICU and very few vendors, with perhaps the exception of GE HealthCare, have successfully moved beyond this setting.
As we described earlier, acquisition is one of the keys to success – or even survival – for some analytics firms. Competition here is becoming intense, with EHR vendors, tele-ICU vendors and high acuity Clinical Information System vendors also developing their own analytics platforms. Epic’s proprietary sepsis prediction model claims to reduce sepsis mortality by 20%. Given the saturation of the global acute EHR software market in the US, EHR vendors are, among other strategies, diversifying into clinical software provision – often in the form of ancillary ‘add-on’ modules. In the longer term, standalone predictive analytics vendors will find it hard to compete with Epic etc as more IT vendors (EHR and CIS) make analytics a native component of the EHR/CIS.
Even large health systems and hospitals are developing their own predictive analytics technology, employing data analysts and scientists to build open-standards algorithms for high acuity prediction and monitoring applications.
Again, analytics vendors may choose to partner with EHR, high acuity CIS or high acuity telehealth vendors, integrating their analytics tools with high acuity vendors’ broader ICU information systems or teleICU solutions. PeraHealth sells its solution in this way via a partnership with high acuity teleICU vendor Caregility.
Primed to Address Pain Points
The PeraHealth acquisition marks another confident step forward for Spacelabs. Having benefitted from the COVID-induced demand boost for patient monitors at all acuity levels, the company is now primed to address some of the pain points experienced by hospitals in 2023. Device flexibility has become a key factor in purchasing decisions, with vendors updating their product portfolios to offer solutions that can flex up or down the level of functionality depending on the patient’s requirements or demands on hospital facilities. Today, that demand is to reduce the cost of care provision by removing patients from the ICU as and when it is safe to do so.
In the media announcement accompanying the acquisition, Spacelabs said that together it and PeraHealth will ‘write the next chapter in digital health innovation’. They will not be the only firms with such lofty ambitions, and Spacelabs is far from being a dominant force in patient monitoring. While the Spacelabs acquisition brings together many complementary facets, there is a lot of work ahead for both firms before the next chapter is written.