When it comes to healthcare, San Diego’s Jim Sweeney has some serious entrepreneurial street cred.
Before taking over the San Diego company now known as PatientSafe Solutions in 2009, Sweeney founded eight healthcare companies, beginning in 1979 with Caremark, which sold to Baxter for roughly $600 million in 1987. His enterprising run continued to CardioNet, which he founded in 1999 with the idea of using wireless technology to remotely monitor heart patients around the clock.
Sweeney raised over $250 million in capital before leaving CardioNet in late 2007, about five months before the company’s IPO. Nowadays, he’s regarded as a wireless health pioneer. And with more than 300 scientists and engineers gathering in San Diego next week for the Wireless Health 2011 Conference, it seemed appropriate to sit down with Sweeney, who is PatientSafe’s chairman and CEO, and Joe Condurso, the chief operating officer.
As we reported in 2009, the company that Sweeney took over was founded in 2002 as IntelliDot, and had been trying to advance technology that was akin to a FedEx barcode scanner for use in hospitals. “With IntelliDot all we did was (track) medication administration,” Sweeney says. “With PatientSafe we have broadened the aperture drastically to include nurse interventions and communications.”
The device developed under Sweeney’s direction is a souped-up Apple iPod Touch that’s been extensively modified to help nurses with just about every aspect of their job. PatientSafe also has customized the iPod Touch for hospital duty by integrating the device with a barcode scanner and a 12-hour battery, and encasing the device in a ruggedized jacket
The wireless “PatientTouch” device, which made its debut earlier this year, is designed to help nurses manage their clinical care workflow, guide patient care, coordinate tasks and communicate with other nurses and doctors (using a hospital’s Wi-Fi network for text messaging or Voice-over-Internet Protocol calls), and to collect and record patient vital signs and other data in real time.
It also is intended to help prevent medical errors, improve quality, and reduce costs—chiefly by saving nurses hours of paperwork.
“We’ve created the world’s first ‘smart device,’ designed for patient care and that incorporates [Apple’s] iOS platform as the main engine,” Sweeney says. “We’re selling clinical process improvements at the point of care, and we’re delivering patient safety and quality along with it.”
Condurso, who says he sees PatientSafe as the Apple of wireless health, cites studies that estimate nurses spend slightly more than one-third of their time (between 34 and 38 percent of their shifts) documenting patient care and feeding the hospital’s legacy information system.
“We’re trying to give nurses back [their] time,” Condurso says. “The advent of mobile platform computing that’s patient-centric and centered on the documentation of all the required information becomes a byproduct, if you will, of the actual care delivered—and we think we can cut that documentation time in half.”
Explaining the underlying concept, Sweeney asks, “When was the last time you memorized a phone number? Hospitals are still forcing nurses to memorize phone numbers metaphorically, instead of using computers to do what computers do—which is capture and record data, and alert you when you need to do things. Why should I as a nurse have to remember that I’m supposed to do something for this patient at 10:07 and then again at 2:32? A computer can tell me to do all that.”
While most of the technology is software-based, Sweeney says PatientSafe spent $1 million with IDEO, the Bay Area design and innovation consulting firm, on product design to make the PatientTouch an all-in-one product. Sweeney also has increased the company’s headcount to more than 100 employees, with about 65 in PatientSafe’s San Diego headquarters.
Since 2003, the company has raised a total of $73 million from venture investors led by Texas-based TPG, including a $30 million round disclosed in 2010, Sweeney says he sees no need to raise additional capital at this time. As of August, PatientSafe had about 60 hospitals under contract throughout the U.S., with about 25 of those projects completed.
“We do all of our own hospital implementation and installation,” Sweeney says. “We’re generating revenue and are forecast to be at break-even next year.”
For the time being, Sweeney says he sees “no direct competition with a handheld device that is even in the neighborhood” of the company’s device.
“I’d say the biggest risk,” Sweeney says, “is the attention span of decision-makers in hospitals, who have been subsumed by reacting to the demands being made by government.” The foremost example, Sweeney says, is meeting the “meaningful use” requirements for adopting electronic health record systems. “The dollars associated with having meaningful use and the penalties for not having it are sucking up a lot of dollars and a lot of attention,” he says.
Sweeney, who has close to 50 years in healthcare, says he also is expecting what he calls “a free-fall” in private insurance reimbursement rates. Sweeney says he meets with hospital CEOs throughout the country, and what they’re telling him is far from comforting.
“What everyone believes is that there’s going to be a precipitous fall in [healthcare insurance] reimbursement rates in the next 24 to 48 months,” Sweeney says. He expects private insurance reimbursements will normalize near current Medicaid reimbursement levels, which means a drop of 50 percent or more—just as a rising tide of baby boomers are demanding increased healthcare by virtue of their numbers.
“Every single [CEO] says they have to take at least 25 percent out of their costs,” Sweeney says. That should create opportunities for PatientSafe by providing technology that hospitals can use to lower their costs by operating more efficiently. Nevertheless, he says, “The challenge really for us is just getting the attention of people who make these decisions. We need to get better at being exposed to hospitals in a short period of time.”
As a result, PatientSafe has been looking for sales partners and consultants that could help the startup gain broader access to key hospital executives.
“The bad news is that hospitals are in the dark ages” of information technologies, Sweeney says. “The good news is that hospitals are in the dark ages.”
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