The Healthcare IT Guy, Shahid Shah, has an interesting post on a story in Business 2.0 magazine.
In this story, the writer interviewed a variety of venture capitalists
about, "business ideas they're dying to bankroll." The business
idea that caught Shahid's attention was the one on home patient
monitoring network for recuperating hospital patients (for which the VC
is willing to throw in $8 million).
patients, not hospitals, and not insurance companies paying bills that
can exceed $5,000 a day. For the critically ill, there's no way around
lengthy visits. But thousands of other patients could be sent home
early if they could be monitored at home or at a lower-cost facility.
Badawi and Aslin envision a wireless transmitter that would attach to
existing hardware such as portable ECG machines and heart-rate and
blood-pressure monitors. The device would send data through a wireless
router to a cluster of back-office servers. The servers would function
like a call center, routing a patient's vital signs to the right
nursing station or on-call physician. Trimming just two days off the
typical 10-day hospital stay for stroke victims would be a service
worth $2.7 billion.
Any patient that is sucking up $5,000 per day in charges is probably
too acute to be a candidate for early discharge and home monitoring.
Typical high volume and high cost DRGs have a median cost per day
of between $1,000-$1,500. Regardless, shaving as little as a quarter of
a day length of stay (LOS) can significantly impact costs and
productivity. The benefits accrue more directly to hospitals than
payors, but everyone wins.
According to AHRQ's H-CUPnet database (listed on my Important Reference Web Links),
the mean LOS for DRG 14, intracranial hemorrage and stroke with
infarct, is 5.7 days rather than 10 days. The "national bill" for this
DRG is pretty high, running $9,076,618,004
in 2003 (the most current data available). The typical charge for
patients with this DRG is $22,940. Most of these patients are admitted
through the emergency department (79.96%), and 11.34% result in
in-hospital deaths. This is a clinically acute group of patients.
There are already remote monitoring products for low acuity patients (more here),
and the niche these VCs seem to be targeting are more acute patients
that could be discharged earlier if they could receive appropriate
therapy and surveillance remotely. The examples in the VC's scenario above include ECG (this implies
arrhythmia monitoring), heart rate and blood pressure - these are life
The very barriers to such a product offering as described above is what
make this an untapped market. The biggest challenge is developing
clinical criteria for qualifying patients for early discharge with
monitoring. If they're too acute, responding to life threatening alarms
from patients at home is too dangerous; if they're not acute enough,
current remote monitoring products will work just find. If this grey
area can be made black and white, and if it results in a sufficiently large
population of patients, we meet our next challenge: the FDA. A product
like this will require a ground breaking regulatory strategy and FDA
buy-in up front. The final big challenge is reimbursement. Usually the
market waits for Medicare to agree to reimburse for a new technology or procedure before everyone stampedes to
market with products. Gaining individual payor buy-in is a less frequently
Technology is not a gating factor in this prospective business plan;
everything needed, from the patient connected device, to client/server
applications and devices for clinicians either exists or can be readily
assembled. The Triage Wireless
non invasive blood pressure sensor pictured at right is a good example
of available technology. Of course, which technologies are selected and
or buy decisions would be critical.
All in all, a very interesting scenario, eh? If anyone wants some help with the business plan, let me know.