Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

{audio:0:00:20} Daniel, could you begin by giving a short introduction to your background, please?

{audio:0:00:27} I began my work with pulse oximetry in the operating room. I worked with a group of anesthesiologists in the 1980s and saw the introduction of pulse oximetry. I saw that transition from a non-pulse oximetry anesthesia environment, with the introduction of pulse oximetry, first here in anesthesia and then migrating to other critical care areas within the hospital. Following my clinical work, I transitioned to Ohmeda, one of the original developers of pulse oximetry technology and then Datex-Ohmeda and, subsequently, General Electrics’ healthcare division, which had purchased Datex-Ohmeda.

{audio:0:01:10} While at GE, I worked with a multitude of different vendors of pulse oximetry technology and had an opportunity to work with all of the potential introductions that were coming down the road and see how they might work clinically, integrating into the critical care environment, as well as into other areas such as homecare and home healthcare, where you might see pulse oximetry becoming much more of a standard of care, as it has done in the hospital.

{audio:0:01:42} How did the pulse oximetry market change and, more specifically, how did it change when Masimo entered with their SET technology?

{audio:0:01:52} We really look back at the 1980s as a transition from a box environment. The original cost of pulse oximeters, here in North America was between $8,000 and $10,000. As the pricing for that box was reduced, we then saw the transition to the sensor. The focus became much more on the technology and its offerings, especially in its consistency in producing information and its ability to integrate that information into monitors within the hospital environment.

{audio:0:02:33} Throughout the 1990s, pulse oximetry technology was very focused on sensors and usually, on those single patient use sensors, so that we could assign a sensor to the patient and that sensor would follow the patient throughout the hospitalization. Typically, with the discharge of that patient from the hospital, that’s where that monitoring ended and it did not continue into the home environment.

{audio:0:03:01} As Masimo entered the market, we had leaps forward in the technology and its ability to reduce artificial problems, which are widely recognized today, within the hospital environment, as a key problem, especially on the nursing floors, where the technology may produce false alarms or fall off the patient. It’s a source of frustration as well as a documentation issue for hospitals. Masimo has really modified the environment of pulse oximetry monitoring within the hospital, by improving the technology, leading to clear and consistent and reliable monitoring.

{audio:0:03:47} You mentioned that you worked for GE, with many different devices. Were you integrating the SET technology, as an OEM, into your products?

{audio:0:04:00} Yes, GE did integrate several different manufacturers of OEM technology and offered those to a variety of different customers, in different physical forms, so that we could ensure we met the clinical needs of the customer, based upon their standardization within the hospital environment.

{audio:0:04:19} They were asking Masimo, effectively, for the SET technology?

{audio:0:04:22} Exactly. In many areas, it was the standard of care within the facility. We saw the Nellcor Covidien technology as a standard of care within many facilities so you wanted to ensure, with that standardization of the monitoring product, that you met the customer’s needs for standardization with pulse oximetry, in all of the clinical areas of the hospital.

{audio:0:04:45} How would you compare Nellcor and Masimo?

{audio:0:04:49} Nellcor certainly became the market leader as we look back to the late 1980s and 1990s because of the wide variety of different sensors, as well as their very aggressive OEM strategy. My personal belief is that Masimo recognized that strategy and really took advantage of it, in offering a multitude of OEM solutions, as well as technical improvements that were recognized by many people as clinical enhancements. I think Masimo really took the book that Nellcor had written, rewrote it to their own advantage and then had a very strong marketing push on a technology level, an OEM level and a clinical level, that has positioned them very well in today’s market, for that high-end hospital customer.

{audio:0:05:42} A narrative that we’ve heard about Masimo taking Nellcor market share is that, first of all, Joe Kiani, the Masimo CEO, I believe went to Congress and eliminated some of the kickbacks that Nellcor was throwing into the mix. The other factor was that the technology seemed to win out for Masimo versus Nellcor and it seems as if Nellcor has been a bit of a hot potato, passed around different owners. It appears that Masimo, with its more focus and not being part of a conglomerate, have really been able to invest in the category more than Nellcor did. Are those accurate ways of thinking about how Masimo began to take share in this market?

{audio:0:06:44} I would definitely agree with that assessment. I believe Nellcor, essentially, stalled out in their technology development. As we look back at the late 1990s and early 2000s, as Masimo entered the marketplace, Nellcor went through a series of different owners and they lost their focus. With the acquisition by all of those different companies, it became a much smaller portion of the product line of all of those medical device companies. We just didn’t see the investment, both in the technology, as well as the marketing of those devices. I think they fell behind with their OEM placements, as well as the technology itself.

{audio:0:07:27} Masimo, took a multi-pronged approach, from a technology perspective, a clinical perspective and, in many ways, an ease-of-use perspective in their approach to the clinician, ensuring a good quality signal. For many clinical areas within the hospital, the simple issue of consistent and reliable readings is absolutely critical because it’s very time intensive to continually return to that patient, find a new sensor location and ensure that you are not providing alarms. As we look back at where both Ohmeda and Nellcor began, it was in the operating room, where the introduction of pulse oximetry was first recognized as a significant clinical value. Of course, the majority of those patients aren’t moving. As we transition to other areas of the hospital, patient movement and the dislocation of the sensor both became a problem and Masimo capitalized on that and their technology overcame many of those clinical issues that the customers were facing on a daily basis. They were a source of frustration for the nursing staff, respiratory therapy and many others that literally produced problems throughout the hospital. As we look at things like electronic medical records, that loss of consistent and reliable documentation of that information was a critical issue, recognized not just by the clinicians, but throughout the facility, as things such as reimbursement, billing and accurate medical records became much more important.

{audio:0:09:17} Masimo has capitalized on a number of areas. Technically, from a vendor perspective, with their very broad OEM relationship base, and from the clinical perspective, they’ve done an excellent job and I expect that would continue.

{audio:0:09:34} Nellcor had this huge position in standard of care and I’m trying to understand, from the hospital and the sales person’s point of view, at what point do they say, we’ve been using Nellcor for seven, 10, 15 years and our contract is coming up; we’re going to switch to Masimo, even though it’s a little bit more expensive; they have the clinical support. Do you have any insight into how that decision is made from the hospital’s perspective?

{audio:0:10:12} From the hospital’s perspective, a transition in pulse oximetry technology is often based on that decision to update their monitoring systems. Typically, we see the traditional ECG, blood pressure and pulse oximetry monitor at the bedside upgraded or completely replaced about every seven to 10 years. In the majority of situations, hospitals are basing their decision on new pulse oximetry integration along with that monitor replacement. What you will see is that the vendors will work together. Philips, GE, Spacelabs and others will, essentially, partner with both Masimo and Nellcor to ensure that they meet whatever future decision is made by that hospital.

{audio:0:11:07} Not only do we see the transition in the monitoring where the nursing staff and other clinicians have to learn, potentially, a new monitor, a new user interface, cabling issues and all of those, but it’s that transition in pulse oximetry technology as well. The sensor placement, appropriate sensor connections, as well as the information that is derived from that sensor. It’s a very significant investment on the part of the hospital, from a capital equipment perspective, to a training perspective with the clinical staff and, subsequently, the IT integration is a very significant hurdle because they have to do all of that data mapping. With new monitors and new pulse oximeter technology, all of those data fields must be mapped over to a new IT electronic medical record.

{audio:0:12:02} It’s a major investment on the part of the hospital. The pulse oximetry is one single step in that entire transition. That pulse oximetry rep will be in the facility, promoting the technology but they also have to recognize that, typically, it’s not a standalone decision but a very large capital equipment decision. With large healthcare systems today, they are typically purchasing that new monitoring equipment for dozens, if not hundreds, of hospitals.

{audio:0:12:35} Just before we move onto home monitoring, you mentioned how Nellcor was very aggressive with the OEMs, so how were they approaching OEMs?

{audio:0:12:47} There were a couple of different ways. Number one was simply matching the technical needs of those OEMs in the late 1990s and early 2000s. We had a lot of standalone pulse oximetry boxes around the hospitals at that time and what we saw were attempts to connect those boxes via cables and other systems to that patient monitor, for the display of the information, along with the ECG and various blood pressures. But of course, we then saw the migration of pulse oximetry technology into the integrated modules within those ECG monitors. That’s where Nellcor, and subsequently Masimo, were very aggressive in meeting the technical needs of those ECG monitoring companies with a package that was both small enough and provided the appropriate power requirements and data output. They would provide that information very well, to those ECG monitoring companies and integrate very consistently and easily with those companies.

{audio:0:13:59} Would it be cheaper than Masimo?

{audio:0:14:01} In terms of pricing, we saw very aggressive pricing but, again, when it came down the module, that was really not the most significant price because companies then were very focused on sensor placement with the single patient use sensor. It became a pricing issue on the sensors and, in many situations, as we transitioned into the ECG monitors, the box, the module that integrated into the ECG monitor, was provided at no cost or a cost placement, over time.

{audio:0:14:36} Why would an OEM choose Nellcor over Masimo, if Masimo is clinically proven to have more effective technology?

{audio:0:14:45} It was the transition for that end user at the hospital. Many end users did not wish to transition because of their investment in existing boxes throughout the facility, in training and sensor application. The OEM ECG monitoring companies wanted to ensure that whichever way the hospital selected, they would be able to meet that need, with either technology. They were really pushed in that direction by the end users who may, at that point, have not been ready to make the transition between technologies.

{audio:0:15:24} Do you think that could be the same as you move to home monitoring, where the hospital may still be used to Nellcor and won’t move to Masimo or vice versa?

{audio:0:15:36} I think that the shift to home monitoring began, again, as a standalone market – as we’ve seen over the past year, with the outbreak of the coronavirus – with the simple fingertip type devices, where it’s not used for a consistent monitoring at home, but much more a spot check type device. I think that home monitoring could face many of those same issues where we have many of the low-cost providers with the spot check devices attempting to keep the market share that they’ve gained. But I think, as we look at the home healthcare market, it’s going to transition to a much more sophisticated market because of the acuity of patients who are being released from the hospital.

{audio:0:16:22} As we look at those patients who could, potentially, be readmitted, they’re going to need much more sophisticated monitoring, to be appropriately cared for within the home and kept out of a return to the hospital.

{audio:0:16:36} That seems as if Masimo’s major advantage here is when it comes to what they are calling the Patient SafetyNet, where the doctors and nurses who are already using Masimo know how accurate it is. Perhaps at least as troubling for the nurses and doctors is having somebody come in for a false alarm. Right there, that whole home monitoring process really just fizzles. You want to have a reliable sensor that the doctors can trust, so they know whether or not the patient needs to come back. One of the things that we’ve seen a couple of hospitals do is having operation centers where they have nurses on staff, with a bunch of monitors all around them, monitoring patients at home. Having this reliable data, when a nurse is monitoring about 60 people at a time, seems extremely important. It strikes us that the generic or retail focused pulse oximeters that are out there just can’t compete when it comes to medical grade level monitoring sophistication. Is that an accurate way of thinking about it?

{audio:0:18:02} I would definitely agree with your assessment. I think we look at a number of issues in the transition from hospital monitoring of oxygen saturation and the other available parameters, to the homecare environment. One of those is that, here in North America, we face a very fragmented market between the hospital and the home healthcare agency. We start to see hospitals that are now extending their care into that home healthcare market, particularly for those patients with chronic diseases, such as congestive heart failure and chronic obstructive pulmonary diseases. Those patients benefit from returning home and staying at home. The hospital benefits as well, in avoiding that readmission.

{audio:0:18:52} But as you point out, it’s the quality of the information that allows them to make appropriate decisions about remaining within the home or, potentially, being readmitted. I believe, the typical retail pulse oximeter does not have the quality, the reliability or the accuracy needed to keep those patients safe in the home. That is where technology – such as Masimo’s – will play a significant role within that homecare environment. But it’s also going to take that transition for hospitals to recognize the need for extended quality monitoring within homecare.

{audio:0:19:33} The typical retail device provides us with a very simple spot check instrument that would include things like blood pressure analysis and, for those patients with congestive heart failure, patients will need to register their weight. We’re going to look at information integration down the road, which is going to take much more high frequency information and high-quality information being returned and, as you said, monitored by those nurses who are looking at information from 50 or 60 patients simultaneously, within that operations center.

{audio:0:20:09} I think there is significant growth to be expected in the future, within that environment. I would look at things like the very rapid growth of telehealth over the last year. That is going to continue to grow. But we do face some technical hurdles with that because that typical COPD or CHF patient is older and may not be technically savvy for the integration of that device and connectivity into the returning of the information back to the hospital. We will face some issues there where it may take not just a home healthcare nurse or aid to provide the actual medical care within the home, but we may need to provide a level of technical support for integration of the information and returning it. There are a multitude of factors here that may play a role in how quickly we can adopt that technology.

{audio:0:21:08} What are some of the reasons why a hospital wouldn’t want to do this? It strikes us that, in an ideal world, if we were starting from scratch, that you would want a patient monitored from the time they were admitted – whether it was a general floor or intensive care or anywhere back and forth – to the time they go home and, ideally, even beyond, for a couple of days, just to make sure that everything is going well; that their drugs are reacting the way they should be, and so on. It also seems as if this would be a great marketing tool for the hospital to say, hey, we are monitoring you all the time, to make sure that you are healthy and safe in a way that, maybe, pulse oximetry wasn’t really a big marketing tool in the past. Maybe there is a marketing angle here for the hospital, as well. What is holding up the hospitals from saying, yes, we should build a telehealth center, we should have nurses monitoring these screens?

{audio:0:22:16} I think there are several issues that are slowing down the introduction of that continuous monitoring throughout a healthcare event. What we do see today, throughout the hospitalization, is that it’s much more common for patients to be monitored from the moment of entry until the moment of discharge. We see smaller monitoring devices that are continuously collecting data, as the patient is moved between care areas and within the care areas themselves. I think that will definitely continue.

{audio:0:22:49} The problem is, at discharge, we don’t know where the patient will be discharged to. We know that they are, most likely, going home but it might also be to a skilled nursing facility, a rehab facility or a relative’s house. In those situations, we could discharge the patient with that monitor, but it’s the ability of that monitor to connect and provide the data back to the monitoring center that is the technical hurdle in many situations. The patient could go home, but with an older patient, or a patient with some cognitive issues, the problem could be, how do I connect that monitor at home to a Wi-Fi network, if indeed it does exist. As we look at that older patient population, they may not have a Wi-Fi network at home.

{audio:0:23:47} We could rely upon new 5G cellular networks, but the problem is that those do not consistently penetrate everywhere in the United States. I live in the Western United States and, in the Rocky Mountains, we can see signals drop off as you drive, literally, two kilometers. Suddenly, you lose complete connectivity, so many people do not have good cellular access and that can be a problem.

{audio:0:24:15} The other issue is, who owns that monitor? If the hospital is now transitioning that and sending the monitor home, is that monitor part of the inventory within the hospital facility or is it part of the home healthcare facility, the skilled nursing facility, the rehab? Who owns that monitor and, upon completion of that monitoring event, the patient is successfully back at home and recovered from their surgery or their illness, how do we get that product back to the hospital? It’s a multitude of factors that come into play.

{audio:0:24:53} Reimbursement is also a key issue. There are varying levels of reimbursement for home healthcare, rehab and skilled nursing facilities and there may or may not be adequate reimbursement for that monitoring. It may be financially advantageous for the hospital to continue that monitoring, particularly in those disease processes where we do wish to avoid readmission. But there may currently not be reimbursement for that monitor, the pulse oximetry sensor and that monitoring center. We have to peel back all these issues.

{audio:0:25:34} Companies such as Masimo, which are prepared for that future, I think are placing themselves at a great advantage because they will be ready once we have all of those other issues addressed. But those issues will be formidable in many areas of the country.

{audio:0:25:54} It seems to be inevitable that, eventually, it will happen and the Covid outbreak really pulled forward some of that interest in the form factors. I think Masimo noted that they had 200 hospitals or so, using SafetyNet for Covid. Having the hospitals become more accustomed to that form factor accelerates the interest but, to your point, there is still some time to go. In an ideal situation, where every patient is familiar with a smartphone, has cellular or Wi-Fi connectivity, there is no financial reason why the hospitals wouldn’t want to have this technology?

{audio:0:26:48} I would definitely agree with that. I think that if we can overcome those clinical and technical issues, it is definitely the future; there is no question. It’s just how fast we get there. Certainly, the past year of the coronavirus and the very rapid growth in telehealth has advanced that opportunity significantly. I think we are going to see acceleration with that as patients themselves try to avoid hospitalization; they’d much rather recover at home. As we simply tax our healthcare system, the ability for patients to remain in the home will be an advantage for everyone involved. It definitely will happen but there are some issues that need to be overcome to have it widespread, throughout the country and adopted by all patient populations.

{audio:0:27:43} Certainly, hospitals may not need that reimbursement to really take advantage of these new technologies because simply avoiding the readmission may be adequately financially advantageous for them.

{audio:0:27:59} Let’s say we have a patient and let’s assume the patient has great Wi-Fi. What is the decision-making process that the hospital has to go through in choosing an at-home monitoring system? Do they look at what the current monitoring systems are that they have at the hospital? Would they look to integrate them with that or would they look to change?

{audio:0:28:33} I believe that most healthcare systems today would look to the traditional monitoring vendors to provide that solution for the transition to a homecare environment. That way, they could utilize the same supplies and accessories, such as pulse oximetry sensors and, from an IT and integration perspective, I believe it would be much easier to bring that information in and really create, not just the hospitalization record, but an overall electronic medical record of the patient’s entire healthcare touchpoints. It goes beyond pulse oximetry into things such as blood pressure monitoring, to ensure compliance with medications. For the congestive heart failure patient, there may be a need to integrate things like a scale? Is the patient maintaining their weight because that is a critical element in avoiding rehospitalization in CHF?

{audio:0:29:37} We have to look at who can integrate these technologies and I think that the traditional monitoring vendors are well-positioned. As we look at other companies that are taking advantage of their integration capabilities, Masimo is definitely a vendor there that has demonstrated, time and again, their ability to not just take advantage of new technologies, such as SET, but also to take advantage of data integration.

{audio:0:30:10} We also have to say, what is the possibility for a future vendor to disrupt the market? Those disruptors could be out there working today on a new technology that we are not aware of and be able to integrate information from a Bluetooth weight scale, from a Bluetooth blood pressure device, into something that would connect to the Wi-Fi and be able to return that information. There are wide open possibilities. But I think that most healthcare systems today really lean heavily on their integrators of monitoring information and would rely upon those from a user interface perspective and a data integration perspective.

{audio:0:30:57} In our research, we’ve seen different technologies, such as a patch or different things to read various vitals. Even if they came out today, it would take years, as you noted earlier with the box replacements happening every seven to 10 years. Even if you had a perfect solution, with a comparable or lower cost to what Masimo offers, what would it take for a hospital system to make that change and how quickly could that be done?

{audio:0:31:34} I believe that new technologies are looking at things such as perfusion and blood pressure. If we look at Perfusion Index and LiDCO technologies that Masimo is utilizing, those could displace things like the traditional non-invasive blood pressure cuff, to provide a good quality set of information back to the hospital. As we look at those, they could displace what are commonly perceived to be, and are accepted as, the standard of care today. It would be much easier to utilize, not just as a spot check device – as would a blood pressure cuff – but literally as a consistent device, over the full day. I think that is where Masimo is well-positioned to take advantage of those new technologies because they will, at some point, be accepted as the standard of care and be much easier to use for that home healthcare patient. They won’t just provide information two, three or four times a day, but really looking forward into the future, what is the patient’s blood pressure, their level of peripheral perfusion, on a continuous daily basis.

{audio:0:32:52} We’ve all been in search of that technology that gives us a very reliable, non-invasive blood glucose level. I think that is a very important part of our future homecare monitoring and I am sure that there are many companies out there working on that today. That is something that is so critically important for that home healthcare patient with diabetes. Instead of doing the finger prick, two to four times a day, to be able to reliably monitor that blood glucose consistently and continuously throughout the day, at a very repeatable and high-quality level, will be a very significant home run for that company.

{audio:0:33:36} I know that Apple and Fitbit – which are now owned by Google – have increasingly added capabilities to their sensors. In fact, Masimo and Apple are currently in a lawsuit over elements of IP around the pulse oximetry sensor. To what extent do you think that one of those companies could play a role in the hospital to home monitoring space? Or is it the case that without the clinical evidence and the experience with the hospital and medical profession that it’s just really hard for them to break in, versus a Masimo or Nellcor?

{audio:0:34:21} I think if we look at both Alphabet as well as Apple, either one of them could be a disruptor in looking at future technologies. With their very well-accepted user interface, that is very simple to use for people in their home, it could be one of those breakthrough issues. I think the problem that those companies will face in the future will be one of that transition from, essentially, a retail product to a medical product. It is going to escalate their challenges from an FDA point of view and an acceptance point of view, at the hospital. It is going to be a challenge but those two are definitely well-positioned to be future disruptors within this market.

{audio:0:35:09} The role of lawsuits has been consistent throughout pulse oximetry’s history, going back into the late 1980s, so that’s not a surprise; I think that will continue as we look at the potential for IP to really play a key role in future developments and financial backing. But Alphabet and Apple could play very significant disruptor roles in that. But the challenges they face are with the FDA and the integration of that information, as an acceptable clinical quality level, into that electronic medical record.

{audio:0:35:49} When we look at the future of the at-home market, is there any reason why the Masimo SET technology is not in the best position to win that market or be a key determinant of Masimo winning that market?

{audio:0:36:06} The technology itself is certainly the best for that home environment. We have a very high-end market within the hospital, that is very willing to accept new technologies like Masimo. But then as we transition to that home healthcare agency, they’re typically looking for a very low-cost provider. Until we see a transition to a continuum of healthcare, I think it will be difficult for Masimo to break into that home healthcare environment because of financial issues. The home healthcare environment is not well funded and they are facing issues where the small, fingertip pulse oximeter is very attractive because of its cost. Masimo is in a position where, for those hospitals that are moving into that home healthcare, that continuum from hospitalization to that return to the community, they will be very well-positioned within those.

{audio:0:37:14} But we see small home healthcare agencies throughout the country, and even the large national players, still being very focused on cost and that will be a challenge in the future.

{audio:0:37:27} I believe for Masimo’s SafetyNet for Covid, their opioid SafetyNet which is still FDA pending, I think the kit runs at about $150 for eight days of monitoring and then another $30 or $40 to extend the sensors beyond the eight days. As we were talking, it struck me that maybe one of the reasons that they can price it so attractively is that it cements their relationship with the hospital system, due to what you were saying about the IT integration. If you are using a Masimo sensor to send people home, that reliably connects and provides accurate data, when the next box upgrade comes, you are less likely to change your sensor company to save a few dollars. I don’t know if that is an accurate way of thinking about it or if there are other reasons why Masimo should maybe lower the cost even more?

{audio:0:38:25} Certainly, lowering the cost even more would make it of greater interest to the home healthcare agencies, but you also have to have an approach of, what is the clinical value of that information? Where Masimo enters is, you have high-quality data as compared to that fingertip device. My feeling would be, I don’t think they need to reduce that price; they just have to work harder at creating that complete integration across the continuum of care. They need to create the relationships between the hospital and the home healthcare agency, so that it is seamless for both the patient, the care prescriber – who may or may not be affiliated with the hospital – and the home healthcare agency themselves.

{audio:0:39:18} I think it’s very attractive, from that price point, to the home healthcare agency. They can buy one fingertip pulse oximeter and assign that to their caregiver who moves from home to home and they can use a $15 to $25 device consistently, at a very low price. They don’t have to worry about the technology out there within the community.

{audio:0:39:49} You talked about different measurements for at-home monitoring; you mentioned that glucose is really important. How do you see Masimo fitting in with the history they have of both oxygen saturation and the other measurements they do versus newer ones such as glucose? How do you see that impacting the at-home market?

{audio:0:40:14} I think it has a significant role in that continuum of care. If we look at things such as the carboxyhemoglobin measurement that is provided by Masimo technology, that can play a role in smoking cessation which is critical for that chronic obstructive pulmonary disease patient. It’s a way of tracking the patient’s reduction in exposure to carbon monoxide through smoking, so it’s a great tool to assist the clinician in making decisions about appropriate therapy and things such as smoking cessation programs.

{audio:0:40:52} From there, as we continue to look at Masimo technology, I think that’s where the SET and the other programs and technologies can play a huge role because that issue of blood pressure and peripheral perfusion comes into play. The application of a non-invasive blood pressure cuff, by placing it on one arm, makes it a bit of a challenge doing it one handed. Most clinicians are very comfortable in applying it with two hands, but if we have an elderly patient at home who is attempting to apply the cuff, it could be a challenge. You are placing it on one arm, using your other arm. The application of that finger sensor, to give us information about peripheral perfusion and, in the future, I believe, blood pressure, is extremely valuable. Again, it’s not a single spot check; it’s continuous monitoring throughout the day.

{audio:0:41:49} We can track that patient’s activity level, associated with blood pressure, oxygen saturation, heart rate and, potentially, body weight, to give an overall picture of that patient’s health. Masimo, with their technologies, is very well-positioned. I think we will see a huge increase in the usage of those values down the road, as they become more clinically accepted. It will make it much easier for the patient and the in-home caregivers to assess that patient and provide quality clinical information back to that monitoring center.

{audio:0:42:34} Masimo, by expanding the selection of measurements, are potentially cementing themselves in the top spot of the continuum of the at-home monitoring market?

{audio:0:42:47} Definitely. Once we see the introduction of consistent and reliable non-invasive blood glucose monitoring, we will definitely see an extension of that existing technology and success.

{audio:0:42:59} Why is Masimo in the best place to win the glucose market?

{audio:0:43:04} I don’t know if they are in the best place, but they may be in the best place to integrate it into their existing technology. Not having insight into their future product development or those of other companies, it’s difficult to assess. But I do believe that Masimo could, very quickly, integrate it and become a key player within that market.

{audio:0:43:25} They could almost be the platform, effectively, and they could integrate other measurements, whether it’s glucose or something else, into their system?

{audio:0:43:33} Exactly. The return of that information back to the monitoring center is just as important as the data collection. With many of those patients today, they may be very inconsistent in monitoring their blood glucose. That could be due to the pain of the needle stick, the hassle or the expense of monitoring. Whereas being able to monitor it non-invasively is going to be able to provide very rapid feedback to those clinicians who could then make a simple phone call with a reminder for that patient to improve their diet or take their insulin. It’s the quality and the reliability of the data that will become part of that future role for Masimo or others.

{audio:0:44:21} Just going back to the decision-making process at the hospital, we are talking about transmitting information from the home, from the patient, to the hospital, into the monitoring system. There is a replacement or upgrade of the system every seven to 10 years. Who makes the decision in the hospital?

{audio:0:44:41} Today, that decision is typically not made at the individual hospital level but at the overall healthcare system level. It gives the hospital much greater purchasing power when they are buying for tens or even hundreds of hospitals across the country and it also gives the supplier – GE, Philips, Spacelabs, Nihon Kohden – the opportunity to break into facilities where they may have no current placement. It really is a very strong situation for both the vendor and the healthcare system.

{audio:0:45:19} The decision is often made at the system level, where the individual caregivers within the hospital may not see those products before they are released and purchased. You would have a complete purchasing decision made by the system by clinicians – including nurses and physicians – biomedical engineering and IT would play a key role in that from a data acquisition and integration role. Typically, the decisions are made at very high levels because these are long-term purchasing decisions.

{audio:0:45:56} How do they make the decision at the GPO level?

{audio:0:46:01} If we look at the GPO level, the hospital system level, physicians will have some role in it, although most physicians are, typically, not working with the monitoring product on a daily basis. You may have some isolated physicians, such as critical care doctors or anesthesiologists, who are working with the product and may have some interest in that purchasing. Nursing will play a very significant role because that user interface is what the nurse interacts with on a daily, if not hourly, basis.

{audio:0:46:41} Biomedical engineering will be concerned about product support and their ability to utilize existing products. Often, if they are looking at new vendors, they will look at the existing vendor and what products can be carried over from the existing purchases into new purchases, to reduce that capital outlay. IT will be very interested in data acquisition, mapping the data to their electronic medical record and the ability to bring that information over. There are a number of different players who have very different roles in their decision making but, overall, those decisions are made at the GMO or system level.

{audio:0:47:26} Let’s say we’re looking back, in 2030. What could be a reason that Apple would be winning the at-home monitoring market? What would have to happen?

{audio:0:47:40} As we look at those disruptors – Apple amongst others – there could be several reasons that they have come in and played a very significant disruptive role. Firstly, they have what is considered to be a very easy to use user interface. That makes it very simple for the patient or the caregiver at home to simply make a connection from the existing pocket device; their smartphone. In that situation, it’s going to be very easy. If we look at Nihon Kohden’s small device where they have, essentially, a wrist device for pulse oximetry, with a cable that goes down to a finger sensor, that device can be linked, via Bluetooth, to the patient’s smartphone and then, subsequently, the information can be sent back to a data collection point. I think that is going to be a foundation for the future. That technology is about five years old now, and I think we will see further integration of that Bluetooth level technology down the road. That would overcome many of the issues for the in-home devices around connectivity that we face today.

{audio:0:48:55} In 2030, I think we will see a lot of smartphone integration that would position Apple and others for the future. Especially if we get into devices that can non-invasively monitor blood glucose. That would be a light year move ahead. The physician office or the hospital can monitor that consistently and provide very fast feedback to the patient about compliance with medications and diet.

{audio:0:49:26} Is there any reason – financial or otherwise – that hospitals would not want this information about their patients? For example, if the patient is at home, they’re crashing and you don’t respond quickly enough, it’s a liability. Are there things like that where you can make the case that the hospitals will say, we’d rather not know and maybe we’ll invest in it when we have to. For now, we don’t really want to do it. Is that a reason why they wouldn’t do it or is that something that doesn’t cross hospital’s minds?

{audio:0:50:01} I think the phrase you are looking for is plausible deniability. Today, I think hospitals are very interested in acquiring that information, particularly with the issue of Medicare readmissions within that first 30 days post hospitalization. The more information and the better quality information I have, the better I am able to make decisions about that patient and prevent that readmission. I can keep the patient healthier, prevent the readmission and improve my bottom line when it comes to that Medicare readmission, for those specific illnesses.

{audio:0:50:42} I see no reason why hospitals would avoid this information, as long as it is of high quality and reliable. Information that simply produces false alarms, consistently throughout the day, that is going to be a problem, as it is in today’s hospital environment. The issue of false alarms has been identified as alarm fatigue and that problem really reduces the potential for a response to a critically ill patient. The nursing staff and others within the hospital simply get tired of listening to that sound and begin to tune it out. What we have to do is ensure that the information that is sent back to the hospital is very high quality, very high frequency and very reliable. Then they can act upon it very quickly and take care of that patient appropriately, while reducing the potential for readmission.

{audio:0:51:52} Looking 10 years out, what does the hospital’s monitoring system look like to you? You mentioned Bluetooth earlier; could you maybe elaborate a bit more on how you think Bluetooth could change the game in how these systems work?

{audio:0:52:07} I believe that Bluetooth will have its primary entry into that home healthcare environment where the patient, literally, is so close to their telephone that the information can be transmitted from the non-invasive collection device, through the smartphone and back to the hospital. The issue of wireless communication within the hospital itself has been a challenging one. Many companies have attempted to do wireless transmission, over the years, and the issue becomes one of signal quality. They just cannot rely upon that signal.

{audio:0:52:46} I think Bluetooth will play a very key role within the home healthcare environment but I don’t think it’s going to play a key role within the environment of the hospital. There are two reasons for that. Firstly, just the amount of interference we see within the hospital. Within the OR and anesthesia monitoring specifically, every time that surgical device is utilized by the surgeon, we see a tremendous amount of electrical energy that is dispersed and picked up by those devices. That creates a huge surge protection problem for any non-invasive and non-wired device.

{audio:0:53:31} The second issue that I think we will continue to see is the demand for spectrum where we see displacement of traditional, non-invasive, wireless monitoring devices within the hospital to other areas of the spectrum. That will continue. As we see the growth of 5G and other cellular technologies, the huge commercial demand for that spectrum, I think that is going to continue and displace many of the current uses of spectrum within the hospital.

{audio:0:54:05} Those two issues of interference and demand for spectrum will, I think, limit its use in the hospital. But because that smartphone device is so close, literally on the patient, in the home healthcare environment, I think it has a key role there. It is also going to reduce the potential for the patient to be non-compliant with monitoring in the home. If they go home and they have wires dangling off them or a blood pressure cuff, that’s going to present a key series of issues to continued monitoring and compliance by the patient at home. Wireless devices would be a key advantage within that home healthcare environment.

{audio:0:54:49} Having seen patients with wires hooked up to them in hospital, especially in critical care, is it inevitable, with Bluetooth, that you will eventually have a hospital where the only real wire that you are wearing will be an IV and the rest is all wireless?

{audio:0:55:16} I think that we can make some advances in that direction but, for many patients, the critical nature of their illness or injury is going to require some forms of other monitoring. Often, that will be invasive monitoring that cannot be done consistently and reliably with today’s technologies. We may see some very significant and major advances in the future that could reduce, or even eliminate, the need for invasive monitoring but at this point, that appears to be a significant way down the road.

{audio:0:55:51} There is that possibility where the only attachment for the patient is with intravenous fluids and medication fluids, but at this point, it appears we are still going to have some of that wire attached to the patient. Again, it comes down to, can I go completely wireless and eliminate other sources of interference? In today’s environment, with the amount of electrical interference within the ICU or OR environment, it seems as if that will be a very major challenge. Especially as new devices are introduced into the ICU environment, such as various types of pumps to support circulation, they all create some sort of electrical or mechanical interference that limits our ability to pick up a wireless signal.

{audio:0:56:43} We have talked to some doctors – anesthesiologists specifically – who have said, we are totally on board with Masimo’s SET technology, but they come out with this other stuff and we don’t really know if it’s worth it. Are there any metrics or readings that anesthesiologists and other doctors would be more receptive to, in terms of non-invasive? Are there low-hanging fruit in that space where there will be greater acceptance? It seems as if glucose would be an obvious one that they would want to have but are there others where the technology is there and they just need to get used to the non-invasive procedure?

{audio:0:57:30} For anesthesia, there are a couple of very significant challenges. Anesthesia has a very specific list of minimum monitoring standards and that list is the absolute minimum criteria. It’s very challenging to break into that list, as we saw with various forms of EEG analysis for depth of anesthesia. Since that list was introduced, nearly 35 years ago, it hasn’t changed much. Breaking that barrier, that standard of care, is going to be very challenging. Blood glucose is certainly one that would be very easily and widely accepted. I think the next one is going to be non-invasive blood pressure monitoring, with some type of sensor technology on the periphery. I think that Perfusion Index is the first step towards that but we need to have a consistent and reliable measure for blood pressure. That would then map over directly to one of those items on that standard of care list.

{audio:0:58:39} I think anesthesiologists are very willing to accept that technology, but we have some hurdles to overcome with that standard of care.

Masimo & At-Home Continuous Monitoring

Former Strategic Director at GE Healthcare

inpractise.com/articles/masimo-and-at-home-continuous-monitoring

Why is this interview interesting?

Executive Bio

Daniel Halstead

Former Strategic Director at GE Healthcare

Interview Transcript

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