From time to time in the healthcare device and equipment market, a perfect storm gathers. The tempest usually unites the forces of the mounting healthcare needs of an aging population of Americans and shortages of personnel within the provider community with a spike in technological advances tossed in for good measure.

For the patient monitoring market, that storm appears to have hit land, and the bulk of patient monitoring devices and equipment are found in hospitals in places like the ER, OR, critical care, neonatal intensive care, post-anesthesia care units and step-down units. So, thanks to market researchers Frost & Sullivan, the key factors that are driving the segment are:

• The aging of the population: Estimates are that by the year 2030, more than 70 million Americans will be over the age of 65. Even more importantly to the market, more than 60 percent of those seniors will experience some form of cardiovascular disease and require treatment.

• Overcrowded emergency rooms: For a variety of reasons, the number of ER visits has soared to the tune of 110 million in 2001 and 108 million in 2000, up from 95 million in 1997 and just 92 million in 1992, according to the Centers for Disease Control and Prevention. At the same time, the number of average annual visits per ER grew to 27,000 in 2000 versus 24,000 in 1997. Admissions of elderly patients to critical care units are also on the rise, and the numbers are up even higher for patients over the age of 75.

• Nurse and physician shortages: This well-documented dearth of skilled men and women is causing a ripple effect in terms of both care and technology. Estimates are that the nursing shortage will reach 20 percent by 2020 as the profession strains under the pressure. In 2000, 32 percent of all nurses were under 40 years old; in 1980, 53 percent were under 40. Also, nurses under 30 accounted for 25 percent of the profession in 1980, but made up only about 9 percent in 2000. In addition, there is a growing shortage of qualified critical care physicians at a time when demand is rising. Some estimates say that 90 percent of hospitals today are "at" or "over" capacity for treating patients. The shortages and bulging capacity are combining to create an obvious need for faster, simpler and more efficient monitoring equipment in hospitals.

It’s clear to say that information technology and the flow of data are important elements in patient monitoring equipment. According to Meltem Buyukonat, patient monitoring industry manager for Frost & Sullivan, digitization and integration of monitoring equipment is "a taste of what we will be seeing in the future." In a recent press briefing on the subject, she noted advances in places like the Indiana Heart Hospital and George Washington University Hospital that are showing digital and wireless monitoring networks are investments that hospitals are willing to make in the name of relatively low-cost, high-value propositions. For example, she said that at the Indiana Heart Hospital, a digital workflow project has been initiated along with Waukesha, WI-based General Electric Medical Systems, a powerful and growing player in this market. She cited the wireless network at George Washington as an example of using monitoring equipment as an efficient way to bring equipment to the patient, not the traditional opposite of that equation. The system, she said, is even leading to shorter lengths-of-stay.

There are, of course, a variety of segments that comprise the overall patient monitoring market, but by and large it involves the real-time continuous or intermittent assessment of critical physiological parameters. The high- and lower-tech equipment used to monitor patients varies from basic devices like blood pressure units and thermometers to very sophisticated machines like multiparameter patient monitors and EEG machines. According to Frost & Sullivan, which published a report on the market this year, "monitoring devices aid end-users in detecting changes in a patient’s condition quickly." Such monitoring, says Frost & Sullivan, promotes earlier intervention and helps in improving patient care and outcomes. This eventually translates into quicker recovery, shorter hospitalization and reduced expenses.

According to Frost & Sullivan’s Buyukonat, the overall U.S. patient monitoring market totaled approximately $6.4 billion in 2002, and has been growing by an average of 10.5 percent annually since 2001. She expects that growth rate to continue through 2005.

The fastest growing segment of the overall monitoring market, she said, are the non-equipment categories. The strongest is the glucose testing market, which accounts for some 40 percent of the total. Disposable test strips represent 87 percent of those revenues, Buyukonat added. In fact, the U.S. glucose self-monitoring market alone reached $2.6 billion ($4.5 billion worldwide) this year. What’s more, that thriving market is growing and should continue its surge because Buyukonat estimates that there are still as many as six million undiagnosed diabetes cases in the U.S.

As for the equipment categories of the market, defined as the real-time, continuous or intermittent assessment of critical physiological parameters, Buyukonat says two – telemetry and external defibrillators – have generated the most interest. She said that the ambulatory telemetry market is expected to generate $333 million in revenue this year, much of it due to replacements of older existing VHS and UHF systems. The new telemetry products are being employed along with higher-cost multifunctional equipment, much of it wireless technology.

Buyukonat dubbed the external defibrillator segment as "the most promising in the commercial and public access market," a statement born out by both medical studies about the success in saving lives by using AEDs and a look around places like airports, schools, resorts and sports and fitness operations where portable defibrillators are now stationed. Not surprisingly, the external defibrillator market is booming to the tune of $464 million in revenue in 2002 powered by a robust annual growth rate estimated as high as 19 percent.

According to Frost & Sullivan, since the introduction of different classes of patient monitors, many changes have occurred within and outside the industry that have altered the course of the market. One of the major shifts has been from standalone single parameter units to multiparameter networked systems. Among the other changes in product features:

• Integration with information systems

• Change from analog to digital

• Shift from wired to wireless

• Increasing use of open architecture in design of devices

• Telemedicine

• Miniaturization of technology

• Increasing communication between devices of different departments in a hospital

• Introduction of non-invasive technology to substitute for invasive monitoring

But despite the many factors that should have boosted the segment even further, the Frost & Sullivan study has found that growth in alternate care sites and acceleration of product approval processes in countries like the U.S. and Japan that help expand the market size, the industry has suffered setbacks from declining reimbursements and price erosion. The Asian Financial Crisis of 1997 and the recent economic slowdown in the U.S. have had a deleterious effect on the patient monitoring market overall; in the U.S. manufacturers are combating declining reimbursements through lobbying for new codes. Plus, the implementation of managed care in the U.S. and similar trends in Western Europe have also severely restricted growth in the patient monitoring market. Add to that the increasing negotiating power and sophistication of group purchasing organizations and integrated healthcare networks, Frost & Sullivan says, has decreased the clout of manufacturers in price negotiations. Market consolidation has been another major factor in the patient monitoring market. Hospital consolidation and consolidations between buying groups have forced mergers, acquisitions and alliances on the manufacturer side. Chief among them are the recent acquisitions by General Electric, which has historically used smaller players in the market as their research and development arm, acquiring established outfits such as Tampa, FL-based Critikon and Milwaukee-based Marquette Medical. It’s most recent purchase, announced in early October, was the completion of its acquisition of Instrumentarium, the Finnish-based concern that operates in anesthesia and critical care through earlier acquisitions of companies such as Datex-Ohmeda and Seattle-based Spacelabs Medical. In 2001, Instrumentarium had sales of $1.1 billion and employed about 5,386 professionals worldwide. In July, GEMS agreed to divest Spacelabs Medical as part of concessions to regulators. It is not yet known whether Spacelabs will be operated independently prior to divestment or in whose hands the big company might end up, but what is known is that analysts estimate that GEMS now commands approximately 40 percent of the U.S. vital signs monitoring market.

Below is a brief summary of recent activities and some newer products from a sampling of the major patient monitoring players:

• Welch Allyn Protocol, the Welch Allyn monitoring business, offers patient monitoring devices and vital patient data to connect clinicians with mobile patients via workstations and wireless devices. According to information supplied by the Beaverton, OR-based company, there are more than 85,000 Welch Allyn Propaq, Vital Signs Monitor, and Atlas monitors in operation in 90 different countries, with the Welch Allyn Propaq monitors recognized as a worldwide leader in field military monitoring applications. The company also sells its Micropaq monitor, which is designed to combine the functionality and form of a patient-worn telemetry monitor with the display, alarms and parameters of a standalone portable vital signs monitor. The Micropaq is designed for use in cardiac care with ambulatory patients connected wirelessly to Welch Allyn’s FlexNet network and Acuity Central Station. The latter product can monitor up to 60 patients at once. The Micropaq provides one or two channels of ECG, heart rate, Masimo SET pulse oximetry and nurse call capabilities. Most recently, Welch Allyn introduced its Vital Signs Monitor 300 Series, a full-featured monitor designed to enhance clinician productivity by providing automated vital signs before, during and after medical procedures.

• Philips Medical Systems, Andover, MA, offers lines of cardiac, monitoring and information solutions along with patient monitors that measure, monitor, analyze and access patient data. Analyst estimates places Philips’ share of the overall U.S. patient monitoring market as high as 43 percent. Monitoring and information management products are available for all levels of acuity and for a range of applications, from obstetrical to anesthesia to adult critical care. Philips entered the monitoring market through the acquisition of Agilent’s Healthcare Solutions Group, and has excelled in the AED market and in electrocardiography. Philips’ IntelliVue system, which integrates a variety of applications from other suppliers on a single screen without needing a second network connection, offers physicians the ability to check a patient’s vital signs such as lab results and radiology reports from anywhere in the hospital or even from the patient’s home via a PC. Plus, its CareVue I2 is a leading critical care information system with an outbound messaging function enabling data to be transmitted electronically to a hospital’s information system.

• Siemens Medical Systems, along with its patient monitoring venture partner Drager Medical, Telford, PA, Siemens recently released its Fabius Tiro anesthesia workstation, designed as a lower-cost alternative to refurbished equipment for the surgicenter market. Siemens/Drager also features a range of anesthesia monitoring equipment through the Infinity line.

• Respironics, Carlsbad, CA, is better known for its sleep management products, but joined the hospital patient monitoring market with the recent acquisition of Novametrix, and now offers a line of non-invasive monitoring equipment designed to form a system of patient ventilation management.

• Fukuda Denshi, a Tokyo-based firm that offers its Dynascope 5000 Series lines of bedside monitors including the DS-5300W system, a compact multiparameter unit designed for flexibility, as well as the DS-5700 central workstation designed for similar flexibility that can monitor up to 16 patients.

Pulse oximetry allies with monitoring products

The pulse oximetry market, though joined with the larger patient monitoring market, is not featured in this report. Briefly, however, two companies have been slugging it out in a pitched battle for market share. One competitor is Nellcor, the Pleasanton, CA-based Tyco unit, which is offering a range of products including the N-595 pulse oximeter, a product featuring digital signal processing technology that is designed to lead the company’s new OxiMax system. Last month, the company and Welch Allyn renewed a longstanding partnership and said that the OxiMax technology is now available in Welch Allyn’s Propaq vital signs monitor lines. The company also has a new long-term contract with Philips in hand.