Company Spotlight: How to cut hospital waiting lists and make money

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The Independent Online

The term "bed-blocking" entered the lexicon around the same time as "alcopops", "spin" and "diamond geezer".

The term "bed-blocking" entered the lexicon around the same time as "alcopops", "spin" and "diamond geezer". But the problem is not new. Patients have long tied up beds, either because they are slow to convalesce after surgery or have nowhere else (such as a nursing home) where they can go. The issue has been given new urgency by NHS target-setting. Free up beds more quickly and you improve patient throughput and reduce waiting lists.

Now a UK company has found a way of doing just that by tackling one of the prime causes of slow post-operative recovery: a fall-off in the rate at which oxygen is delivered around the body during surgery. Deltex Medical Group, which is traded on the AIM market, has invented a system for monitoring blood flow during and after surgery and allowing doctors to detect and deal with the problem through the administering of fluid and drugs.

Its monitoring system is called CardioQ. It draws data from a disposable probe that is inserted in the patient's oesophagus. A host of studies have shown CardioQ can cut recovery times by as much as two-fifths. Deltex has spent much of its time in the past 18 months persuading NHS trusts to assess the economics of CardioQ by trying it out in widescale tests. In most cases it has been funding the costs of data collection.

Now all that is changing. Medway NHS Trust in Kent adopted the system in April as a "standard of care" for all its moderate- and major-risk surgical and critical-care patients. The results of a post-procurement review showed that CardioQ cut an average of two days off the time patients stayed in hospital. In other words, the system pays for itself several times over. Deltex still has trials in another dozen or so UK hospitals, but these are expected to lead to firm orders soon.

The impact on sales - just £3m last year - will be dramatic. Deltex will make most of its money from the sale of disposable probes. It is reckoned that the deal with Medway NHS Trust will be worth upwards of £100,000 in probes - and there are 400 hospitals in the UK that could adopt the system. Deltex may not win them all, but it is worth noting that it recently appointed the former head of the NHS, Sir Duncan Nichol, as a non-executive director. That surely cannot harm its marketing effort.

At Deltex's recent shareholders' annual meeting, the chairman, Nigel Keen, said there was good feedback from the other NHS trusts auditing the results of their CardioQ trials. He suggested it was now a question of when, not if, the system was adopted on a widespread basis. There was also a good chance of a hospital in Europe or the US announcing a deal shortly. Deltex is well advanced with its marketing in parts of Europe (France especially) and the US, where CardioQ received upgraded regulatory approvals last year.

All of this has to be put in the context of a company valued on the stock market at just £16m. That figure may rise as Deltex issues more shares to fund working capital when sales build up. But this is a small company in what is potentially a big market. That market could be bigger still. Earlier this year, Deltex launched a softer probe which can be used on conscious patients - widening the range of applications for CardioQ.

Thanks to a soggy stock market, the shares have been treading water for most of this year, despite the mounting evidence that CardioQ has proved itself. I reckon they are worth picking up on a two-year view at the current 26.5p.

Now, one for risk-takers. Eurodis Electron is one of Europe's biggest distributors of electronic components - not a good market since 2001. In the past two years, Eurodis has racked up losses of £76m and only saved itself from oblivion by raising £57m in new money. Because of a shortage of cash at critical periods last year, it lost market share, which will take time to rebuild.

Despite that, all but one of its major suppliers has stuck with the company and the market has clearly turned for the better. The last set of figures had an air of throwing in the kitchen sink about them and the board has been busy picking up shares at 3p and 4p a time since they were announced.

The first priority for Eurodis will be to regain market share, so profits will lag, despite a lot of cost-cutting in the past year. But at the current 3p, the company is valued at about £28m, a touch less than net worth. Even last year sales were £225m, which gives some idea of the recovery potential. But it is probably not one for light sleepers.

Pshearlock@yahoo.co.uk

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