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The Honolulu Advertiser
Posted on: Sunday, March 13, 2005

Local firm unveils diagnostic pad

By Sean Hao
Advertiser Staff Writer

For Hoana Medical, sales of an advanced diagnostic hospital bed may not be science fiction much longer.

Patrick Sullivan, left, the CEO and founder of Hoana Medical Inc., and Scott Christensen, the executive vice president of marketing and sales, hope the company's LIFEGuard Patient Vigilance System is going to be a big seller at hospitals around the world.

Photos by Rebecca Breyer • The Honolulu Advertiser

This fall, the three-year-old downtown Honolulu business plans to begin commercial sales of its LIFEGuard technology that turns a typical hospital bed into something out of the "Star Trek" medical bay. The technology uses a special pad and monitor to automatically display and record a person's heart and respiratory rate without the need for leads, electrodes or cuffs.

The device, which also helps determine when a patient gets out of bed, promises to lower labor and liability costs by providing constant and automated monitoring of the ill, according to Hoana President and Chief Executive Patrick Sullivan.

Hoana, which is Hawaiian for "to measure," was spun off by Honolulu research firm Oceanit in January of 2002.

As a member of Hawai'i's fledgling biotech community, Hoana, which employs 21 people, is the type of business that local leaders hope will help move the state away from its dependency on tourism. The company's effort has been aided in recent months by $5 million in investments, but its most significant achievement could come in the fourth quarter when sales of LIFEGuard are slated to begin, pending U.S. Food and Drug Administration certification.

"That's a big deal," Sullivan said. "I'm not worried at all. (FDA approval) is going to happen.

"It's just a question of how do we roll it out, (provide) customer service (and) following up with the customer and making sure they're delighted with what we're doing. That we're actually impacting the quality of care," Sullivan said.

For hospitals, the potential payoff of the technology is in providing closer monitoring of patients with existing staff. Typically, nurses check in on patients at least four times a day during their rounds.

The LIFEGuard system monitors a patient's condition continually and also discloses if the patient has left the hospital bed for any reason.
"With LIFEGuard you are basically allowing nurses to become more efficient," said Lawrence Eron, an infectious disease consultant at Kaiser Moanalua. "I think that's the only way to deal with the nursing shortage is to have more efficiency."

Trials of the device are ongoing at Tripler Army Medical Center under a $7.7 million U.S. Department of Veterans Affairs contract and separately in the Kaiser Moanalua Hospital intensive-care unit where issues such as accuracy and sensitivity are being investigated.

The system works by producing an electrical signal in response to a patient's physiological changes, which in practice can be detected through clothes, sheets and blankets. Hoana has one patent and applications on five others covering the technology, which was initially developed under an Army research grant aimed at detecting a soldier's vital statistics amid the noisy environment of a helicopter cabin.

The end result is akin to the futuristic medical devices familiar to sci-fi fans. However, Sullivan, Hoana's CEO, said the company can't rely on that factor alone to generate sales. Hoana's plans include hiring its own Mainland sales force to market the devices for an estimated 1 million U.S. hospital beds that lack continuous healthcare monitoring.

Scott Christensen, the executive vice president of marketing and sales at Hoana Medical Inc., demonstrates a bed outfitted with the LIFEGuard Patient Vigilance System. The system is intended to allow a hospital to more efficiently use its support staff.
Their initial focus is on sales to large regional hospitals, such as New York Presbyterian Hospital and Cedars-Sinai Medical Center in Los Angeles and eventually nursing homes, Sullivan said.

No price range for LIFEGuard was provided, though the system is expected to sell for "thousands of dollars."

"We think the hospitals will benefit financially while the quality of healthcare goes up," Sullivan said. "It's an intelligent system that tracks how somebody is doing because there aren't enough people around if they get into trouble.

"This improves quality and it reduces cost. There's a need for that in the U.S. and the world."

Overall demand for such patient monitoring systems is forecast to rise 6.7 percent a year to $8.2 billion in 2008, according The Freedonia Group Inc.

That demand is being driven by an increase in the elderly as the baby boom generation ages along with efforts by hospitals to offset staff shortages, said the Cleveland-based industrial market research company.

Hospitals will remain the leading buyer replaced by the home healthcare segment by decade's end as more patients are treated at home, according to Freedonia.

However, breaking into the hospital market can be a challenge, particularly for smaller companies, said Mark Leahey, executive director for the Medical Device Manufacturers Association in Washington, D.C.

"They have to show that theirs is either similarly priced or cheaper and that the performance is similar or superior to existing technologies," he said.

"Price or performance, one of the two will get you in the door."

So far Hoana has raised about $7.6 million, mainly from local investors, and is seeking an additional $10 million, which Sullivan said would take the company into profitability. Manufacturing of the devices will be outsourced to the Mainland or Asia, though, as sales grow. Hoana expects to increase local employment by 14 people by year's end as customer-support services are added.

"This is incredible. It's an amazing journey," Sullivan said.

"We've got a long ways to go, but we've made terrific progress."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.