Technology positions i-STAT for market growth

Technology positions i-STAT for market growth – Company Profile

Susan Schooleman

Founded in 1983, i-STAT Corp., Princeton, N.J., has carved a niche in the hospital blood test market and is positioned to expand aggressively, with its sights set on establishing its product as a viable competitor to hospital monitoring systems.

The corporation’s sole product is caned the i-STAT Portable Clinical Analyzer. The patented, hand-held device is about the size of a portable phone receiver. It delivers results of the most common blood tests in 90 seconds at the point of patient care. Traditional lab-processed blood tests require an hour or more to process. Using two drops of blood, the Portable Clinical Analyzer tests levels of sodium, potassium, chloride, glucose, urea nitrogen and hematocrit. These properties are measured by physicians in emergency rooms and critical care areas. The levels reveal the severity of a patient’s condition. They also tell a physician the amount of blood loss and the extent of an infection.

The analyzer also is simple to operate, requiring no lab processing. Currently 63 hospitals are using the i-STAT test, which is sold by a sales force of 28, including 22 sales reps. This is a far cry from the three sales reps and one product manager who made up the marketing staff when marketing vice president Harry Fini joined the corporation in April 1992. Fini recalled the evolution of the marketing effort to sell the Portable Clinical Analyzer, which was released in June 1992.

“We invented a black box. Other companies have come out and they may have made the technology smaller, but they haven’t changed the technology. You still need a laboratory to run their tests,” Fini said. The Portable Clinical Analyzer’s list price is $3,000 with a $12 per disposable cartridge containing the six blood tests.

When selling the i-STAT Portable Clinical Analyzer, sales reps target a group comprised of administrators, physicians and lab personnel. The decision to purchase i-STAT must be collaborative to combat a skewed perception. It took the corporation about three months to learn this. At first, sales reps targeted only physicians.

But physicians thought it would eliminate the lab, a potential threat to the success of the unit. However, the lab still plays a role in the process by keeping records of test results. To clarify this, sales reps made their pitch to physicians and lab employees. But they encountered another problem. Hospital administrators would veto the purchase, not realizing how it could save the hospital money.

Now when they sell the product, sales reps outline 12 steps that a typical lab test requires to complete. These include: the physician ordering the test, paperwork, the separation of blood cells (centrifugation) and the physician acting on the test results.

“So many things can go wrong. The paperwork can get lost or the test can be sent to the wrong machine,” Fini said. “In the meantime, you’re away from the patient.” Human error is the reason lab tests have a 5% rate of inaccuracy, compared to i-STAT’s 1% inaccuracy rate, he added.

Another selling point focuses on the restructuring of healthcare systems. Sicker patients are being moved to areas of less intensive care. This means clinicians who do not have the same expertise as doctors or nurses are going to have to treat these patients. It also reduces the use of I.V. solutions. Often physicians will start an I.V. of sodium, potassium and glucose for a patient who appears unstable. This is merely a precaution and will be administered while the physician awaits blood test results from the lab. When the readings of these blood properties appear sufficient, the I.V. is discontinued. By yielding immediate results, the i-STAT test saves this expense.

“The costs of our product are virtually all direct and variable,” said i-STAT president Bill Moffitt, regarding another selling point. “That means, it doesn’t cost anything until you use it. In a managed care environment there are more direct and variable costs and fewer indirect and fixed costs. It only costs the hospitals when they use it.”

The corporation also is capitalizing on what it views as hospital care moving closer to the patient’s bedside. “There is definitely a movement of lab medicine as we know it to the patient’s side for both clinical reasons and economic reasons,” Moffitt said. In fact, although monitoring systems may not consider themselves as i-STAT competitors today, they will in the future. Moffitt foresees the technology used for the i-STAT Portable Clinical Analyzer being incorporated for patient monitoring. Thus, monitor companies and blood test companies will become direct competitors.” The two businesses will meet, and we will meet at the patient’s side,” he said.

When selling the product, the company targets different urgent care areas. They are: the emergency department, intensive care unit and cardiac care, neonatal intensive care, dialysis department, burn unit, operating room, along with cardiovascular surgeons, thoracic surgeons and perfusionists. The emergency-oriented nature of the product is how it was named. “STAT” is the code for “quick” in the hospital while the small “i” stands for the corporation’s former name, Integrated Ionics.

The most effective means of publicizing the test has been through legitimate news stories, generated by an outside marketing-communications firm. The company contracts with The Weber Group, Cambridge, Mass. Contracting a firm is more cost-efficient than an in-house service because the cost of the group equals the salary of what a good in-house public relations person would cost, without additional staff and materials, Fini noted.

Since March 1992, The Weber Group through press releases and media contact, has managed to generate full-length stories about i-STAT in eight national publications, as well as product announcements and stories in 44 trade publications. One of the biggest breaks occurred when i-STAT’s product was profiled in a half-page article in the New York Times technology section shortly after it was released in June 1992.

The corporation also has reached its audience by attending shows such as: College of American Pathologists, American Society of Clinical Pathologists, American Assn. of Clinical Chemistry, Clinical Laboratory Managers Assn., Thoracic Surgeons meeting, Pediatric Neonatology meeting, the American College of Emergency Physicians, Emergency Nurses Assn. and the Cardiovascular Anesthesiology meeting. Prior to the meetings, i-STAT advertises in the group’s publication, announcing that it will be at the meeting.

But the corporation’s strongest selling point is its product and the potential of its technology. That is what attracted the Voluntary Hospitals of America Inc., Irving, Texas, to i-STAT. VHA signed a 3-year contract in June 1992 to incorporate i-STAT Tests in its hospitals.

The VHA has more than 660 non-profit hospitals and 200 affiliates with more than 220,000 beds. So far the device is used in about 30 hospitals, but Keith Harville, VHA vice president of business and technology development, stresses that the use of the tool is still in its infancy. “It’s still too early to assess how extensively it will be used. Most hospitals start with one department, then expand to other departments. There are a lot of potential applications for that this could be very beneficial,” he said.

The Portable Clinical Analyzer caught VHA’s attention because it seems to contain the beginning of a dramatic new frontier. “The general trend in the industry is to move patient care closer to the patients and to move the patients through the system more quickly. That means turning around diagnostic information more quickly,” he said.

Harville first met i-STAT officials during the 1990 Robertson Stevens Medical Conference. VHA had initiated a Technology Development Program that involves five individuals with clinical background, researching innovative technology and how it can improve VHA hospitals.

The group was so impressed with i-STAT that it produced two videos about the Portable Clinical Analyzer. One demonstrates how to use the test, while the other is aimed at selling the product. Harville declined to disclose the expense of the videos.

The success of i-STAT hinges on the way it marries technology and marketing. These two distinct approaches are reflected in the corporation’s origin.

i-STAT was founded by Imants R. Lauks, a Ph.D.in electro-chemistry, and venture capitalist Robert Johnston. Johnston, who has started several health/ environmental companies, met Lauks while Lauks was studying at the Moore School of Electrical Engineering at the University of Pennsylvania.

Johnston recognized the potential of Lauks’ technology which used biosensors to detect a change in electrical activity when a chemical reaction occurs within the blood. Johnston is now a major shareholder in the corporation, while Lauks serves as vice president of research and development and chief technology officer and director.

At first i-STAT was called Integrated Ionics. Its goal was to develop integrated chemical biosensor technology. In 1987, it changed its name to i-STAT to reflect its commitment to using proprietary microsensor technology for medical diagnostic applications. During 1987, the corporation developed a prototype which could be used for early testing and evaluation.

The corporation now has 210 employees, including 28 involved in research and development. This month it will release a new cartridge that will provide tests for only sodium, potassium and hematocrit. The panel of three tests will cost about half of what the six-panel test currently costs. Some emergency rooms requested the new product because they use those three tests more often than the others.

The corporation also is preparing to file with the Food and Drug Administration, a test that can detect the calcium pH in the blood. This can be used to determine bone loss. By the end of 1993, it plans to have a test that is able to indicate blood gas content.

i-STAT estimates that $1.1 billion is spent worldwide by hospitals, physicians and other healthcare providers to conduct the same blood tests performed by the i-STAT System. These tests are growing at a rate of 8% per year, the corporation believes.

So far, corporate officials are pleased with i-STAT’s growth and its even greater potential. “The odds are substantially against anyone actually being successful in achieving such a development as a stand-alone company,” said Moffitt. “The way I look at it, i-STAT is a company that has achieved a significant breakthrough in technological development, and one that will have a revolutionary impact on both the quality and cost of patient care.”

COPYRIGHT 1993 J.B. Lippincott Company

COPYRIGHT 2004 Gale Group