Since our time at HIMSS back in February, we’ve hosted multiple briefings with industry leaders and investors regarding the ‘intelligent hospital’ concept and growing market buzz around Real-Time Locating Systems (RTLS) technology and its applicability in the healthcare provider market. By definition, RTLS encompasses active and passive RFID, GPS, WiFi and other location-based systems and is utilized to track and identify the location of assets and/or persons in real or near-real time.
As such, RTLS technology has many potential benefits in the provider market as it can significantly improve and automate workflows, patient and staff monitoring, compliance documentation, and equipment maintenance and utilization rates. In addition, it’s becoming increasingly relevant in healthcare as providers look for ways to improve patient and staff safety, enhance the quality of care, contain costs, and promote patient satisfaction.
VDC Research estimates that less than 5% of U.S. hospitals leverage an RTLS solution for asset management (medical devices, equipment, instruments, and personnel), while at the same time 8 out of 10 hospitals are interested in deploying such a solution. Additionally, a 2011 KLAS report found that 95% of responding healthcare providers realized gains in operational efficiency due to RTLS technology. The healthcare RTLS market represents a unique opportunity for vendors that are able to fill this critical technology gap and enable hospitals to become connected / intelligent.
Capital markets activity over the past three years underscores the point:
April 2014: Health Insight Capital, a subsidiary of HCA, made an equity investment in Intelligent InSites
February 2014: Cardinal Health acquired Wavemark and showcased the acquisition at the 2014 HIMSS conference
December 2013: Stryker Corporation acquired Patient Safety Technologies for $120 million
June 2012: Awarepoint secured $14 million in new funding from a combination of new and existing investors. Awarepoint has received over $75 million in funding since 2008 from multiple investors, including Avalon Ventures, Cardinal Partners, and Health Evolution Partners
June 2012: AeroScout was acquired by Stanley Healthcare for $239 million
April 2011: Awarepoint acquired Patient Care Technology Systems
In addition, Ekahau has received over $40 million in funding since 2001 from a variety of investors including Nexit Ventures and 3M
In our view, the Veterans Administration Health System is likely the leader in RTLS technology among healthcare providers, as it recently established a system-wide RLTS deployment through a 5-year, $543 million contract. The initial scope of the VA’s RTLS rollout will cover multiple use-cases, including asset management, catheterization lab supply management, sterile processing workflow (for more, see my March post on this topic), and automated temperature and humidity monitoring. The VA’s RTLS initiative could be expanded in the future to include capabilities such as patient elopement, hand hygiene monitoring, and additional specialized workflow tracking (e.g., emergency department). As an enterprise-wide deployment with multiple use-cases, it will be the first of its kind in the healthcare provider market. If successful, the deployment will likely be a catalyst for enterprise-wide adoption of RTLS technology as other health systems and providers follow suit in order to benefit from the operational visibility, intelligence, and analytics that can be realized from an end-to-end deployment.
The current healthcare RTLS vendor landscape makes an end-to-end deployment difficult for providers. The landscape is fragmented with several leading vendors providing point solutions that are based in a specific area of the hospital or focusing on management of a particular type of asset. Case in point, the VA’s RTLS project requires multiple vendors including:
- WaveMark for catheterization supply management
- Censis Technologies for surgical instrument management and sterile processing workflow
- Intelligent Insites for data aggregation and processing
- We expect to see continued funding and consolidation in the space as vendors strive to capitalize on this market opportunity by offering a “one stop shop” RTLS solution that enables end-to-end deployments. Let us know what you think.
