BBI Contributing Editor

ORLANDO, Florida – The American College of Cardiology (ACC; Bethesda, Maryland) is a traditional venue for showcasing new medical technology and drugs related to heart disease and management. Amid a bevy of new clinical drug trial results, the innovations in medical equipment sometimes become obscured, but this year there were many significant findings from the technology side.

Heart failure affects more than 5 million in America, and accounts for more than 15 million office visits each year. As a disease of the elderly, there are currently over 500,000 new cases each year, and that number will accelerate as the baby boomers continue to age. The industry trend is to move from devices and therapies to address the acute phases and episodes of heart failure, to more and more of a disease management and prevention focus. Currently, heart failure consumes more money than any other disease, and the problem is growing.

One of the most interesting new approaches to managing/improving the life of patients with heart failure management uses bi-ventricular pacing. In clinical studies reported at this year's ACC gathering, bi-ventricular pacing proved remarkably effective in early clinical trials for congestive heart failure patients. One reason perhaps is that up to 53% of heart failure patients have intraventricular conduction defects of some sort, resulting in ineffective contraction of the heart's ventricles and reduced ejection fraction/CO. This low output, coupled with the conduction defects, puts more than 50% of heart failure patients at risk for sudden cardiac death, not to mention limiting what activities patients can perform in daily living.

The results came from the MIRACLE trials, in which Medtronic's (Minneapolis, Minnesota) bi-ventricular pacemaker was used to pace both the left and right ventricle in a synchronized manner initiated by sensors in the heart's pacemaker. In effect, the patient's heart is resynchronized by this type of pacing to circumvent the ischemic or necrotic/scarred tissue in the heart ventricles. By working around these areas and pacing both ventricles simultaneously, the heart contracts more effectively and more like it did when its conduction system was healthy and intact. Initiating pacing below the damaged or dead tissue (that can't contract) allows the good muscle to contract more effectively and at the appropriate time to enhance cardiac output. What results is that cardiac "cripple" patients (whose ejection fractions were so low they could hardly stand and only walk short distances) are able to get up and walk briskly around their homes and perform other tasks when aided by these new pacemakers. When the news of these positive results from the MIRACLE trial broke at the conference, the crowds filled Medtronic's booth to find out more. Medtronic had to be elated by the reception of its devices by the ACC crowds. Medtronic is a company that is transforming itself to become a provider for non-acute, chronic care patients.

Medtronic has entered into a partnership with Data Critical (Bothell, Washington), which was showing Stat-View, and will be doing a pilot installation at Florida Hospital (Orlando, Florida) to deliver lab data from Quest Laboratories back to nurses via a Data Critical pager. Data Critical is a supplier with a wide OEM audience, supplying Agilent, Siemens, Welch Allyn Protocol, Vitalcom (which it is buying), GE Medical Systems, Spacelabs and others. Data Critical also has a marketing partnership with Agilent, which appears to cover some of the same territory as its arrangement with Medtronic. Recently, it has made an offer to acquire Vitalcom (Tustin, California), a small supplier of the most innovative wireless medical telemetry system (608-614 MHz.) band telemetry.

Data Critical is an unfortunate parent for Vitalcom. While it is true that Data Critical has increased revenues from $4.7 million to $19 million in only three years, it has increased losses on operations even faster, from $6 million to $19 million in the same period, reducing its investment capital from $34 million to about $19 million. Unless the company can demonstrate that it knows how to make a profit, it threatens to suck Vitalcom back into a major loss situation at the very time that its new technology is turning around Vitalcom's own negative performance picture. Of all the potential buyers for Vitalcom, which included Datascope, Spacelabs and others, Data Critical may actually be the least attractive from a long-term perspective. If this deal is consummated, it will result in a much weaker position for Vitalcom than the company would have had if its marketing partner, Datascope (Mahwah, New Jersey), for example, had acquired Vitalcom. Moreover, there may be some trouble brewing with the joint Agilent-Medtronic relationships by Data Critical, and should these result in legal action, the long-term outlook would become even more confused for Vitalcom, as well as its new parent.

Noninvasive imaging is always a theme at ACC, with the newest and most expensive, full-featured, cart-mounted color ultrasound scanners being featured in many booths. But there was a major change in direction at this year's show. We saw a new, low-cost, miniature ultrasound scanner introduced and on display in the Agilent booth. This new echoscope unit is targeted at the physicians' office population, to handle a number of procedures that in the past would have required a much larger, more expensive echo unit to perform. By changing the value equation, Agilent is opening up new physician office markets for ultrasound, potentially a very clever move in a market that is somewhat sluggish.

Agilent is being acquired by Philips, but until then Agilent retained its own booth and separate identity. It was a good thing too, because one could get lost in the Philips booth, which consumed two complete aisles and dwarfed ever other vendor at ACC, including direct rivals like GE Medical Systems Information Technologies (Milwaukee, Wisconsin). One can only wonder what booth space will be like next year, when Agilent is finally integrated into Philips after the deal is finalized.

Other vendors with large booths included GE, Siemens/SMS (Danvers, Massachusetts) and the usual several drug companies. The other monitoring vendors, lacking imaging, had their normal-sized booths, which seemed smaller in comparison to the huge booths of the market giants. Being big, however, may not be as much of an advantage as it has been in the past. Finding someone who even knew all the products their company was showing was unusual, and often required one rep to ask another and then a third. By the fourth rep, you were usually in the vicinity of the equipment you asked about. From a hospital point of view, try calling these companies and finding the right division and person to speak with for parts, for example. The confusion and frustration may encourage hospitals to deal with smaller competitors that are still service-oriented, and often have more cutting-edge technologies than their larger competitors as well.

The age of bigger-is-better would have come to an end long ago were it not for the group purchasing organizations, whose management fee structures prefer a few contracts with large competitors to more contracts with smaller ones. Nonetheless, in looking at the patient monitoring market last year, every first-tier competitor lost revenues, and every mid-sized competitor gained revenues over the previous year, which included a massive increase in revenues due to Y2K replacements. Last year clearly was a time in which the revenues for the second-tier companies grew at the direct expense of the first-tier competitors' market shares. If the second tier can pull this off again in 2001, the distinction between the two market tiers may begin to blur. Datascope already has broken the $100 million barrier in its monitoring group, Protocol is growing again, and even tiny Vitalcom is expanding and making a profit. All of this may indicate that health care providers are taking a second look at mid-sized suppliers of patient monitoring and liking what they are seeing, not to mention the value it represents.

The larger players in the sector are not going to simply concede the low-acuity market in small hospitals to smaller competitors who were previously able to offer less-expensive monitors. All major companies have expanded their product lines in both acuity directions to cover all market needs, and also are aggressively competing at the low end, while continuing to compete in such higher-acuity segments as intensive care units and cardiac care units. Some small competitors are nearly in shock about this change, as if some unspoken "gentlemen's agreement" between small and large vendors, and the markets in which they would compete, had been suddenly violated by the larger companies.

The former status quo of small companies making low-acuity monitors and serving small- to mid-sized suburban and rural hospitals, while large companies make high-acuity monitors and serve big urban hospitals, is definitely a thing of the past. Big companies are determined to serve all acuity levels in all hospitals in all geographies. They are increasingly adding back dealers for some of the remote geographies, to complement their direct sales organizations located in metropolitan areas.

The smaller companies must figure out what their advantages are and how to present them to the market. They will have to fend off this new assault from their suddenly aggressive larger brethren if they want to survive. Even niche markets aren't necessarily safe harbors any more. Every niche market – from MR monitoring to noninvasive cardiovascular monitoring – is being eyed by some new competitors hungry to reverse the revenue losses experienced during the past year and a half. Niches as small as $25 million a year are being re-examined, even if they have two or three existing players in them with established market shares. Alternate-site markets, physician offices, clinics, freestanding surgical centers and home care/assisted living also are being carefully looked at by every vendor.

On the vital signs monitoring front, there were new products from some companies and hints of new things to come from others. Agilent Technologies (Andover, Massachusetts) continued to showcase its portable monitors and patient-worn devices, including the M-series and A-series, now wireless (thanks to Proxim Technologies), as well as its newest EASI 12-Lead WMTS-band patient-worn telemetry transmitters. To augment the bedside capabilities of its patient-worn system, and to differentiate itself from rival Welch Allyn Protocol (Beaverton, Oregon), Agilent also showed the Telemon portable bedside display with integrated noninvasive pressure capabilities, providing a hybrid solution covering ECG, SpO₂, and NiBP parameters.

Agilent stresses the convenience of the EASI lead system, a technology it inherited when the company acquired Zymed Medical (Oxnard, California) last year. The A1 and A4 are the reworked Nellcor units which Agilent obtains from OEM supplier Analogic (Wakefield, Massachusetts). The A1 is the starter kit with only noninvasive BP and SpO₂. Options are available for ECG and remote recording (as no bedside recording is supported). This product is aimed at office surgery, general ward or other applications where minimal surveillance is required. The A4, available with either monochrome or color display, is the bigger brother designed to compete with Welch Allyn Protocol, Datascope (Mahwah, New Jersey), MDE (Arleta, California) and other vendors' portable monitors. It includes a built-in recorder and additional parameters.

Not to be outdone, GE Medical was showing its new Dash 4000, a small portable with a large, 10.2"diagonal screen, more than enough to display six traces. The monitor offers true (non-EASI) 12-lead ECG, respiration, non-invasive and two invasive blood pressures, pulse oximetry and end-tidal CO₂. It even had the ACI-TIPI predictive algorithm built-in, a capability not found on any other portable we are aware of, and only offered as an expensive option by Agilent. This monitor dropped into a docking station (ala Siemens' Pick-N-Go system), which we thought was a patented feature of the latter system. One lever releases or locks the Dash monitor, making it easy to "go portable," and just as easy to attach to the hard-wired bedside network when you come back. When portable, the Dash uses a Symbol Technologies 2.4 GHz. frequency-hopping spread spectrum (FHSS) transceiver to keep data from the portable supplied to the central nursing station. About the only thing GE Medical overlooked was to web-enable this monitor at the bedside, although data from its monitoring network is web-compatible through a network gateway. This is a lot of monitor in a small package, at an aggressive price.

The ACC provided interesting insight into worldwide defibrillator markets. Significant players in this market include: Medtronic PhysioControl, Agilent, Zoll Medical, Medical Research Labs, Datascope, Survivalink and others. Of these, Zoll (Burlington, Massachusetts) was clearly emerging as the small, biphasic hospital defib of choice. The momentum it has been gathering over the last two years has resulted in growth of the company from about $50 million to more than $100 million in only a couple of years. Its popular M-series has been a great success; however, the OEM supplier of the vital signs portion of that defibrillator, Siemens, has aligned itself in Europe with PhysioControl (Redmond, Washington), a move that leaves Zoll looking for an alternative supplier who is not working with its major competitor. This would be an ideal opportunity for many of the smaller suppliers, companies like Ivy Biomedical (Branford, Connecticut), Alliance Instruments (Vancouver, Washington), Inovice Medical (Newberg, Oregon) or even mid-sized competitors like Welch Allyn Protocol, MDE (Arleta, California), Datascope or contract engineering firms like Analogic. At the rate Zoll is selling M-Series devices, this could become a sweet OEM business for one of these companies. Alternatively, Zoll quickly moved in with GE Medical to occupy the vacuum created by the PhysioControl divorce, and is working on a defib module that will work in the GE product line. Perhaps this will be expanded so that GE supplies parts and integration for the next iteration of the M-Series. If there is a strategic weakness in Zoll's armor, it has to be the lack of rapid market acceptance of its Rescue-Net products. It seems to be having some trouble displacing PC in the important, pre-hospital EMT and paramedic market, during pre-hospital transport, although Zoll is making some inroads.

Zoll has looked to the first responder segment for its growth outside of the hospital, as has market leader PhysioControl, which was talking openly at ACC about the coming explosion of the use of such devices in public venues. The announcement by the Federal Aviation Administration only a month after ACC that all U.S. airlines would now be required to have these devices installed on their planes added credibility to the rhetoric at ACC.

The third resuscitation player at ACC, Cardiac Science (Irvine, California), is a bit harder to figure out. Its failed acquisition of Spacelabs Medical and then its acquisition of Artema (Sundbyberg, Sweden) left a bad taste at Spacelabs, and perhaps in other potential customers, who would see Artema as a potential competitor in the non-U.S. markets, if not immediately in the U.S. Thjat was not of much concern to Cardiac Science's marketing partner, PhysioControl, but its subsequent acquisition of Survivalink, a supplier of automatic defibs, was did concern PhysioControl, since Survivalik is a direct competitor. The logic of these various moves by Cardiac Science CEO Raymond Cohen has left many industry observers wondering if there is a true strategy involved, or if Cohen just likes to buy companies. Cardiac Science could end up offending both its potential OEM customers such as Spacelabs and others who lack their own defib technology and its major OEM distribution partner, PhysioControl, at a time when it needs to establish a viable, direct marketing channel The company is working on a defib module, designed to plug into Agilent, and ultimately to GE and Spacelabs monitoring systems, but creating this with the assistance and support of these companies is a lot easier than with their opposition. With GE's new alliance with Zoll, and Agilent being a major defibrillator supplier itself, there seems to be no compelling reason they would want to make Cardiac Science successful. In the end, the loser may be the patient who is denied this important new technology because the company that invented it may have trouble getting its marketing act together.