The consumerization of dialysis at home

Telehealth and the ability to remotely meet with doctors became a saving grace during the pandemic, especially for older Americans. With the COVID-19 Delta variant sweeping across the country, Outset, a maker of home dialysis machine Tablo, is set to disrupt the industry for dialysis patients.

The care delivery model of dialysis patients needing to go into a clinic three days a week has not changed since the early 1980s, noted Outset CEO Leslie Trigg. “What has changed is the cost–it had ballooned to about 7% of the entire Medicare budget even though the population constituted 1% of beneficiaries,” Trigg said.

Meanwhile, the mortality rate has been about 22% for patients on dialysis. There is about a five-year average lifespan from the start of dialysis, according to Trigg.

Another trend is that mortality is not being driven by the aging of that population. In the past five to 10 years, the dialysis population is getting younger and it is increasingly diverse, she said. “You’ve got an influx of younger patients because of diabetes, hypertension and obesity. So that unholy trinity is driving younger and younger adults into the need of dialysis and at incredibly high costs.”

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Outset felt the market was ripe for new technology and decided to look at in-home dialysis treatment. “Data demonstrates that patients live longer when dialysis is at home and in hospitals less often,” Trigg said. Other factors are that because of the time-consuming nature of treatment, patients often cannot continue to work, she noted.

Another reason Outset decided to aim new technology at an at-home model is because patients do better clinically and healthcare costs are lower, “and we had the notion that people who could be at home could be liberated to work” since they could make their own schedules, she said.

In terms of ROI, Outset said Tablo reduces acute labor and supplies cost by up to 80% based on costs for dialysis in the ICU and that it can reduce overall dialysis program costs up to 50%. At the Cleveland Clinic, the projected annual ICU dialysis cost was $5.4 million before the facility began using Tablo, and it cut costs by 55% with the machine was deployed, according to Outset. The was achieved through savings of $1.5 million on supplies and $1.4 million on labor, with an annual cost of $2.4 million for ICU dialysis post-Tablo, Outset said.

At least one analyst is bullish on Outset and Tablo. Cowen analyst Joshua Jennings gives the company an “outperform” rating and said, “Tablo can service both the home and hospital dialysis markets, which have U.S. TAM [total addressable market] of $8.9 billion and $2.2 billion.” Jennings added that Outset “has a lower EV [enterprise value] yet, arguably better home growth potential and an in-motion hospital opportunity that we believe has been overlooked.”

Water treatment in a box

In order for conventional dialysis machines in a clinic to run, they have to be connected to a huge water treatment room. “Water is a big deal; you need purified water that is governed by certain standards,” Trigg said. Machines that circulate a patient’s blood through a dialyzer must be connected to pipes in a wall that runs to a roughly 2,000 square-foot water processing facility in the back of a clinic that stores huge vats of purified water and dialysis solution, she said.

Outset has eliminated all the infrastructure and miniaturized the process to a water treatment facility in a box. This enables patients to have purified water and dialysis medicine inside Tablo, which streams information in real-time.

The machine has almost 70 sensors with security controls and predictive algorithms to simplify the setup process by automating a lot of the steps, Trigg said. There’s a disposable cartridge that most patients can put on the machine in nine minutes, and a 10-step instruction process guides patients with 3D animation, she said.

“The goal is we don’t want to put medical equipment in the home,” Trigg said. “We wanted to consumerize the experience and make it feel as much as we can like a consumer product that happens to deliver a medical therapy.”

Tablo stands 36 inches tall compared to a conventional dialysis machine at 5 feet. “The goal is for it not to be intimidating,” she said.

Outset started the design work in 2011 and had a fully scalable, commercially releasable version in 2018. “What made it really challenging is there are thousands of components in that 36-inch box,” Trigg said. “To make something simple, we really had to pack a punch internally.”

The technology inside

Company officials also wanted Tablo to get smarter over time so two-way wireless data transmission was added, which required FDA approval. Tablo also integrated blood pressure cuff readings and everything related to the treatment is automatically streamed to the cloud either through Tablo’s web portal or a patient’s electronic medical record, Trigg said.

Tablo was developed using native and proprietary software including data analytics and predictive algorithms. The sensors are from third-party suppliers, she said.

Outset also streams a half-million data points related to the machine’s performance. “Every sensor, every valve, every filter is monitored and measured and we transmit all that data, which we use to do remote diagnostics” if something isn’t functioning correctly or to improve service, she said.

Every customer hospital has a unique access code that lets them see only their data, she said.

At the end of 2020, the install base was about 1,100 consoles, Trigg said. The public company reported about $50 million in revenue for 2020 and expects to earn just shy of $100 million this year, she said.

Treatment in the time of COVID

As a result of COVID-19, Tablo can also be used to remotely monitor parameters in hospital patients in real-time and to look for trends in arterial and blood pressure, Trigg said.  

Because the machine is mobile, it can be rolled up to a hospital bed. “There has been a spike in acute kidney injury during COVID and an increase in having to deliver dialysis in hospitals,” she said.

“So when PPE was in short supply, nurses were trying to avoid having to go in and out of a COVID patient’s room,” and Outset developed the remote monitoring capability so that a patient’s treatment can be monitored from any computer, Trigg said. The company also does remote software updates.

Trigg believes Tablo is a game-changer because there is no other system that purifies water and makes the dialysis solution on demand. Most of the setup process is automated and training takes 10 days, she said.

Dialysis with Tablo is also done on-demand, as opposed to a patient having to spend eight to 10 hours preparing the solution whenever they want to dialyze, according to Trigg. The patient just needs to walk up to a screen, press “get started” and Tablo automatically starts purifying the water, she said.

In addition to the flexibility factor is that dialysis treatment at home means patients don’t have to sit in a clinic exposed to 35-40 other patients who are immunocompromised, Trigg noted.

It is also very common for dialysis patients to be extremely fatigued after a session and the recovery time can be anywhere from four hours to a whole day after treatment, she said. Most patients report a much shorter recovery time after each treatment at home, she added, because Tablo has a pause function so they can stop and take a break.

“We heard from a patient who is dialyzing at home that [Tablo] allows me to dialyze to live, as opposed to living to dialyze in a clinic,” she said. “It can change the lives of so many patients.”

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