David Palmer thinks ClearCount Medical Solutions’ technology will push it over the top in the burgeoning surgical sponge detection market.
ClearCount, which uses embedded radio-frequency ID chips to track and detect sponges, has the backing of Draper Triangle Ventures as it wrestles with two major competitors for control of the market. After raising $3.4 million last year in a Series A round, ClearCount is looking for more.
ClearCount has already received federal regulatory approval to market two versions of its sponge counting and detection system and is investigating branching out into other markets, such as metal surgical instruments. President and CEO Palmer said the company is looking to increase 2010 revenues by as much as six to eight times over last year, though he wouldn’t share specifics.
ClearCount’s foray into the market comes at an opportune time, after Medicare in 2008 halted payments for so-called “never events” — serious, avoidable and costly medical mistakes, such as leaving a sponge inside a patient after surgery. Still, the 22-employee company’s success (or that of its competitors) is far from assured. A simple — and obviously cheap — counting procedure detects 82 percent of sponges left behind in surgical procedures, according to a May 2009 article in the journal Surgery, raising questions about how necessary sponge-detection technology really is.
Nonetheless, ClearCount, founded in 2004, appears well-positioned should the market take off. Palmer joined the company in 2006 after working for about three years as operations chief for influential economic development group Pittsburgh Life Sciences Greenhouse. Prior to that, he worked for about 10 years in hospital administration at UPMC, a $8-billion health system in Pittsburgh.
Palmer spoke with MedCity News about what separates ClearCount from its competitors and what it hopes to do with its next round of venture funding.
MedCity News: How does your technology work and what problem does it solve?
David Palmer: Our first product offering is focused on patient safety in the operating room. The issue we’re addressing is retained surgical sponges and we do that by leveraging RFID technology. We place an RFID chip inside of surgical sponges and that allows us to not only count and account for every sponge, but it also allows us to detect every sponge if one is missing from the count. Retained sponges represent both the most dangerous and most frequent retained surgical items and are estimated to occur one in every 1,500 intra-abdominal surgeries in spite of rigorous manual-counting procedures.
MedCity News: Talk a little bit about the competitive landscape of the surgical-sponge-detection market.
DP: There are two other solutions in addition to ours that are currently on the market. One utilizes barcoding technology [Eds. note: SurgiCount Medical]. The other utilizes what is called electronic article surveillance technology, known as EAS [Eds. note: RF Surgical Systems].
There are clear differences between us and both of those. The barcoding solution is a counting-only solution and doesn’t offer detection benefits. The EAS solution is detection-only and because of technical limitation isn’t capable of counting. So we’re the only solution that can handle counting and detecting. Having both elements is critical in preventing the problem.
MedCity News: How much investment funding has ClearCount received to date, and from whom? Do you expect to seek any more in the near future?
DP: We’ve to date raised just under $11.5 million. We will be seeking additional capital this summer for expansion and growth for a Series B round. I’d prefer not to say how much. The primary source of our venture funding is Draper Triangle Ventures.
The proceeds of our Series B would be for working capital to meet market demand for our product, plus building inventory and manufacturing. We don’t anticipate increasing the headcount in the company significantly over the next year.
MedCity News: What are one or two key milestones you hope ClearCount hits over the next year or so?
DP: We’ve recently announced a strategic sales and distribution partnership with Medline Industries. We’ll be leveraging their talented sales force, and it’ll be important for us to continue to develop that relationship.
Also, tracking and counting surgical instruments is one of the other things we’re pursuing from an R&D standpoint. We received a $1.1 million [National Institutes of Health] grant focused on instrumentation a couple years ago, so we’ve made progress related to an instrument solution. One of the challenges associated with instrumentation is the ability to have a metal-encapsulated tag that would withstand repeated sterilizations.
MedCity News: Are you aware of any state or federal laws that require sponge or surgical instrument counts in operating rooms? Do you think something like that would be beneficial to patient safety, or would it be unnecessary?
DP: The Assn. of periOperative Registered Nurses, which is a large trade organization for operating room nurses, currently publishes recommended guidelines for counting surgical sponges in the operating room. There are strong recommendations related to procedures for counting. Historically those have been focused on the manual process, but we anticipate the revised policy will encourage the evaluation of technologies to eliminate errors. They revise their polices every three years and they should be releasing an update in the next four to six weeks.
< p>I’m not sure a government mandate will eliminate the problem. These are clearly accidents that usually occur when other disruptive events are going on in the operating room. Our solution automates what has typically been an error-prone manual process and I think technologies like ours are clearly the future of a safer operating room.