Through this acquisition, Stryker wants to reduce and eliminate the possibility of sponges and other foreign objects from being left inside patients' bodies after surgery.
On the last day of 2013, Stryker announced that it is acquiring Patient Safety Technologies for $120 million in cash.
The company operates under a wholly-owned subsidiary - Irvine, California-based SurgiCount Medical - and makes equipment and software that helps to prevent surgical sponges and so-called Retained Foreign Objects from being left inside patients' bodies during surgery. Stryker agreed to pay $2.22 per share to buy the company, which trades over the counter.
SurgiCount Medical makes the SurgiCount Safety-Sponge System that is composed of the SurgiCounter, a mobile computer that tracks the use of the company’s bar-coded Safety sponges and other disposable products, and the SurgiCount 360, a software application.
But the transaction is more than just about patient safety. According to the Stryker news release, announcing the acquisition, “RFOs are the most common operating room ‘Never Event’ in the U.S.” with sponges being most common retained object. About 2,300 incidents are reported yearly whose average cost per incident is more than $400,000.
“This acquisition aligns with Stryker's focus on offering products and services that have demonstrated cost effectiveness and clinical outcomes,” said Timothy J. Scannell, Group President, MedSurg and Neurotechnology, in the news release.
In the third quarter, Stryker’s MedSurg division, which will now include SurgiCount Medical, had sales of $792 million, an increase of 1.5% from the third quarter of 2012.
The transaction is expected to close in the first quarter.