Medtronic to snap up startup that aims to prevent a major surgical error for $235M

RF Assure Detection technology--Courtesy of RF Surgical

Inadvertently leaving items such as sponges, gauze or towels inside a patient after surgery can result in significant complications. Now, Medtronic ($MDT) is paying $235 million to purchase RF Surgical Systems, which has a technology that's intended to make it easier to detect and prevent surgical items from being left behind in a patient.

Its RF Surgical system uses a low radio frequency (RF) signal to track and detect surgical gauze, sponges and towels that are embedded with an RF tag. The system is designed to work through blood, tissue and bone.

The acquisition is in line with Medtronic's ongoing emphasis on value-based healthcare--the effort to reduce costs and improve outcomes in order to better serve healthcare providers and patients. RF Surgical will become part of the Medtronic Surgical Solutions division within the Minimally Invasive Technologies Group. Innovation, globalization and economic value are the three main pillars that Medtronic sees driving its long-term growth.

"Patients are our priority," Chris Barry, SVP and president of the Surgical Innovations business within the Minimally Invasive Therapies Group at Medtronic, said in a statement. "Improving patient safety and outcomes is our daily focus, which directly aligns with the RF Surgical technology, a simple and cost-effective solution to avoidable complications in surgical procedures."

A tagged cotton disposable--Courtesy of RF Surgical

Surgical Solutions is already one of Medtronic's stronger performing groups. In the most recent quarter, it had $1.3 billion in revenue, which was a gain of 10%. That's out of total revenue of $7.3 billion for the quarter that was up 7%.

The deal will close, pending undisclosed regulatory approvals, in August. The FDA cleared the RF Assure Detection System in 2006. The flagship product is already in use at more than 4,500 trauma as well as labor and delivery suites in the U.S. Further financial terms remain undisclosed.

RF Assure Detection technology works via the transmission of nonionizing, low-frequency radio waves to detect any tagged cotton disposables. Earlier this year, the company unveiled the latest version of the system, which includes a scanning component via a handheld device that can be used for detection in extremity, head, neck, spine and other specialty procedures. After the scan, surgeons are given a confirmation code that it was performed. This can be added to the patient medical record to document the patient safety measure.

The company claims that the system offers a cost savings and avoidance rate of more than three times the initial implementation costs.

"As we strive to make the RF Surgical technology the global standard of care, we look forward to the innovation opportunity afforded by our combined capabilities," said RF Surgical CEO John Buhler in a statement.

- here is the release