Cardiovascular Monitoring Market—Thriving, Despite Obstacles?

Originally Published MDDI May 2002

NEWS & ANALYSIS

Maureen Kngsley

Although it cites an aging baby-boomer population and other market drivers, a report published by Frost & Sullivan (San Antonio, TX) last month lists three factors as having the greatest negative impact on the cardiovascular monitoring equipment (CME) market: consolidation of care providers and hospitals, lack of technical training for end-users, and a saturated market.

The market as a whole appears healthy. It generated $287 million in revenues last year, growing by 3.1% from 2000. The estimated compound annual growth rate from 2001 to 2008 is 4.2%; however, according to the report, the number-one threat to these optimistic figures over the next two years is the consolidation of hospitals into ever-larger purchasing groups. Medicare's recent belt-tightening and consequent reduced payments for hospital outpatient services have significantly influenced the purchasing practices of hospitals and other healthcare providers, and will continue to influence them over the next few years. Hoping to enhance their buying power, these institutions are looking more to group purchasing organizations as a solution, which in turn can mean diminishing sales for device manufacturers.

On top of the consolidation issue, manufacturers are facing hospitals that are unwilling to purchase high-end heart- monitoring equipment, according to the report. The reason? To further cut costs, healthcare providers are asking their employees to perform both patient-care and technician responsibilities. Because many of these workers lack a thorough knowledge of and appreciation for the cardio equipment they operate, they tend not to realize the benefits of spending more money on higher-end, potentially superior equipment. When presented with an array of CME products, hospitals are choosing based on price alone—and the manufacturers of the more advanced (and therefore more expensive) equipment are losing out to the makers of the less technically innovative and cheaper equipment.

Because the CME market is mature, and dominated by such behemoths as GE Medical and Philips Medical, smaller and younger manufacturers are having a tougher time breaking in. They will continue to have difficulty over the next two years especially, according to the report. In the United States, more than 50 companies are competing within the CME market. Mergers and acquisitions are common, and smaller CME players are having trouble surviving on their own.

The severity of the threat posed by each of these three challenges is up for debate, but companies concerned with staying competitive are advised not to ignore them.

Copyright ©2002 Medical Device & Diagnostic Industry