If you were watching the BBC’s Ten O’Clock news on Tuesday night you will have seen an item about an extraordinary British invention – the CardioQ.
You will have seen a diagram of a long tube inserted into the gullet from where it measures the rate of blood flow from the heart, enabling doctors to establish how much oxygen and nutrients are being sent to vital organs.
This remarkable medical device can allow post-operative patients to leave hospital two days earlier than they otherwise would have done, vacating a much needed hospital bed and saving the NHS thousands of pounds each time it’s used.
The CardioQ is the work of Deltex Medical (LON:DEMG) – whose factory in East Sussex I visited about eight years ago. If ever there has been a company that seemed to have a fantastic product that should be leaping off the shelves it was Deltex.
And yet in the 20 years of Deltex’s existence it has always been a case of ‘jam tomorrow’. Year upon year Deltex has described its prospects with great confidence, said that sales were just around the corner, and then proceeded to raise new funds just to stay afloat.
That could be about to change. Deltex is now on the cusp of a major breakthrough. And in fact this is only part of a much bigger story – one that could prove seriously lucrative for penny share investors in the year ahead.
Deltex reaches the promised land
The big breakthrough for Deltex came recently when the National Institute for Health and Clinical Excellence (‘NICE’) recommended that the CardioQ should be used throughout the NHS for ‘patients undergoing major or high-risk surgery or other surgical patients in whom a clinician would consider using invasive cardiovascular monitoring’.
“There is a reduction in post-operative complications, use of central venous catheters and in-hospital stay (with no increase in the rate of re-admission or repeat surgery) compared with conventional clinical assessment with or without invasive cardiovascular monitoring”, explains NICE. “The cost saving per patient, when the CardioQ is used instead of a central venous catheter in the peri-operative period, is about £1100 based on a 7.5-day hospital stay.”
NICE estimates that 837,000 surgical patients each year would benefit from the CardioQ, and that across the UK as a whole it would deliver annual savings of £1bn.
“The great thing about this is that everybody wins”, explained the Chief Executive of NICE, Sir Andrew Dillon. “There are fewer complications for patients post-operatively, they spend less time in hospital and the NHS can save money. It’s a much more efficient way of undertaking this kind of surgery.”
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Why did it take the NHS this long?
Given this win-win situation the real question is why it has taken so long for the NHS to recommend the benefits of the CardioQ. Conceivably this has something to do with the competing claims of the similar system offered by LIDCO (which medical experts tell me is inferior).
But rather it seems to reveal the difficulty of getting the vast sprawling NHS to actually make decisions. In responding to this huge commercial breakthrough Deltex’s Chief Executive, Ewan Phillips, was, I thought, rather diplomatic. “It takes a long time for ideas from the clinicians to feed through to the senior management – the sort of people who can make decisions to do things on a wide scale. That’s always been a problem in the NHS.”
I should say so! The CardioQ, with its terrific contribution to patient recovery and NHS efficiency has been around for years. But only now when the pressure is really on to save money is the NHS grasping the nettle.
I have met countless small companies over the year, all targeting the NHS with products designed to keep wards clean, improve operating efficiency, and cut costs but somehow their attractions get lost in the labyrinthine decision making structures of the NHS. Today though the NHS is charged with delivering £20bn of efficiency savings over the next four years and is finally taking action.
As I have said in recent Penny Sleuths costs are now being cut throughout the public sector. Local councils and health authorities can prevaricate no longer. Spending cuts may not be popular but I reckon they are set to radically increase the efficiency of the public sector. That is great news for Deltex, for Advanced Computer Software (see: The penny stock that could overhaul the public sector), and no doubt many others.
Another great story for 2011
So we have the second internet boom. We have the biotech boom. We have the very exciting recovery in UK manufacturing. And now perhaps we can add the ‘British Austerity Drive’ to the list of great investment stories for 2011. I’ll be keeping you up to date on the latest developments in these stories in the months ahead.
Of course one of the big stories this year will undoubtedly be gold mining. So I hope you got a chance to take in my Gold Raid report this week.
• This article was first published in Tom Bulford’s twice-weekly small-cap investment email
The Penny Sleuth.
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