JOHN GROTTING - BRIDGE MEDICAL, INC.
CEO Interview - published 06/15/00

DOCUMENT # KAD208

JOHN GROTTING is President and Chief Executive Officer of Bridge Medical, Inc., a technologies and services company headquartered in San Diego. Mr. Grotting has had 28 years of healthcare management leadership experience, serving as CEO or COO for Bridge Medical, Allina, and Legacy Health System. He has also been an active board member for several start-up medical technology companies. Mr. Grotting joined Bridge Medical, Inc., in May 1997, shortly after its inception. Bridge Medical, Inc. was founded to help hospitals eliminate medication errors, reduce the occurrence of adverse drug events and continually improve quality in the delivery of drug therapies. Under Mr. Grotting’s direction, Bridge has worked with customers to analyze their current systems, integrate the information technology currently installed, bring new technology to the bedside, and span the communication gaps that exist among physicians, nurses, pharmacists and patients. Since Mr. Grotting joined the company, Bridge received FDA approval, patented Bridge technology, and successfully installed a first customer site. Bridge also won a Medical Design Excellence Award sponsored by Cannon Communications.

Sector: Specialized Health Services

TWST: Let’s start out by giving us an overview of Bridge Medical — the company’s history, products, services and customers.

Mr. Grotting: Bridge Medical is a healthcare information technologies company founded in 1996 to help hospitals eliminate medication errors, reduce the occurrence of adverse medication events and continually improve quality in the delivery of medication therapies. We have developed a system that is located at the patient’s bedside and acts as a safety net for the patient and the nurse as the final check before administration of a medication. The process of administering medications involves several steps: the doctor orders the medication, that order is sent to the pharmacy and transcribed, the pharmacy prepares the medication and delivers it to the nursing station, the nurse obtains the medication and administers it to the patient at the appropriate time. The nurse must verify that he or she gives the right medication in the right dose through the right route to the right patient at the right time, and make sure that there are no allergies and that the dose is appropriate for the patient. The process can include as many as 65 separate steps involving reliance on human memory with multiple hand-offs and duplicated efforts — overall, an error-prone process. Serious injury or death related to medical errors occurs with the same frequency as the airlines lose your baggage. A recent survey found that fear of getting the wrong medication is the number one concern of patients entering a healthcare facility. Bridge has developed technology that identifies and prevents the majority of medication errors irrespective of where in the process they occur. We have over 15 months of experience with the system live on patients and are currently installing improved technology at additional sites and have a backlog of customers. This is a $3 billion market based on our target of 2800 hospitals that have over 100 beds. Our business model would generate in excess of $1 million in revenue per hospital. There are several additional revenue opportunities involving the use of the aggregate information and alternate care markets, including long-term care and smaller hospital facilities.

TWST: How are hospitals responding to the medical errors publicity?

Mr. Grotting: Hospital executives feel pressure from multiple fronts to do something about medical errors. Their staff of clinicians, doctors, nurses, pharmacists, and risk managers — understands this serious problem and knows that the current system exposes them to harming patients and further liability. On the other end of the spectrum, this issue has received so much national visibility that Congress is entertaining legislation that requires error reporting. As a result of the national press, most Board of Directors of hospitals and several large employers are concerned about this issue and demanding that action be taken to ensure patient safety. The end result is that the hospital executive is aware of medical errors and can no longer ignore the problem.

TWST: Who puts the information into the system?

Mr. Grotting: Most information is entered from clinical system interfaces or by bar codes, which makes it very easy to use. Nurses interact with the system as they administer medications to patients. A very sophisticated clinical decision support system, developed by Bridge, evaluates the data and looks for appropriateness of the medication. If an error is detected, the nurse is alerted and provided an opportunity to correct the mistake. We designed the system by studying the process by which nurses deliver medications to patients. We evaluated processes that are especially problematic for errors — and designed a system to detect and prevent those errors. For example, we looked for gaps or hand-offs in the process, and tried to minimize reliance on human memory to ensure accurate data. We also carefully studied the workflow of the nurse to make sure that the system we designed would be intuitive and streamlined. At the bedside with the medication, the nurse uses a bar code reader to scan his or her name badge, scan the bar code on the patient’s wristband, and finally scan the bar code on the medication label. This ensures the five rights (medication, dose, patient, route and time) and screens for potential allergies and excessive doses. The system displays warnings for problematic medications that have a high potential for errors such as sound-alike, look-alike names, and inappropriate routes. We eliminated duplicate steps in order to improve efficiency. The information collected through this process is automatically documented on the medication administration record (MAR). In most hospitals today, the nurse has to record the information on a paper chart and sometimes on an additional flowchart, a process that is fraught with inaccuracies and duplications. Finally, this information is stored to create a very powerful data repository comprised of all medication usage in that hospital, not just the medications ordered for patients. This data repository provides further insight to the medication delivery process and where errors occur, providing tremendous opportunity for the hospital to change processes that will have a greater impact on error and cost reduction. This repository also provides useful data that detects variances in standards of care or adherence to existing protocols, which can lead to additional improvements in the delivery of care.

TWST: Where do most common errors occur?

Mr. Grotting: The most common medication errors in terms of frequency are oral medications. The most serious and consequential tend to be IV medications. Although IVs only account for 15% of the doses administered, when an error occurs it is often quite serious, if not lethal. However it is important to note that serious complications, including death, can occur with all types of medications.

TWST: Can you expand on the significant trends, developments and changes that you anticipate in your marketplace over the next several years?

Mr. Grotting: There’s no question that the focus on preventing medication errors will continue. Public concern continues to grow around safety of the healthcare system. Hospitals will continue to address this issue to regain public confidence in the healthcare system. The hospital industry is under tremendous financial pressure, so the solutions need to provide a demonstrable economic return, which our system clearly does. Healthcare facilities will need to use information technologies more aggressively to support clinicians in their practice. The healthcare industry is behind other industries in investing in technology solutions, but acquisition barriers are lowering due to newer technologies and lower cost options. For example, the Internet has allowed hospitals to deploy clinical systems on lower-cost computers. Successful clinical applications will have to become Web-enabled, work easily with other technologies, and have shorter implementation timeframes. Hospitals will need to install the infrastructure necessary to deploy these technologies, and will need evidence that costs involved produce positive clinical results. Bridge is positioned to provide this type of service. Healthcare consumers are more empowered and involved in healthcare decisions, primarily due to the improved accessibility of information on the intranet. As consumer knowledge increases, so does the demand on healthcare providers to remain current with new information. This demand can be met by providing knowledge bases to consumers and clinicians at the point-of-care. Hospitals are challenged by payers to provide evidence that they comply with standards of care and monitor outliers. For example, a simple medication like aspirin can have a very positive effect on reducing the morbidity of patients with heart disease. If patients are not taking aspirin, they are considered an outlier to the standard of care for heart disease patients. There may be a valid reason why the patient is not on aspirin, but often times not. These outliers can be costly in terms of clinical outcome of the patient and cost of therapy over time. This places a demand on hospitals to have readily accessible data on patient outcomes, and will require the use of systems to help monitor these processes so that the clinician can have maximum impact with their interventions. Systems that provide an electronic monitor of patient outcomes will add significant value to healthcare facilities. Finally, there are probably many other common patterns that contribute to medical errors that we just don’t know about yet, as it has been difficult to obtain and analyze a large sample of data on medical errors or near misses. There is tremendous value in identifying these patterns and sharing this knowledge with other healthcare providers — this could actually save lives. Systems that can aggregate this data and share results, like the Bridge system, can add tremendously to our current knowledge about errors.

TWST: Tell us about your R&D progress.

Mr. Grotting: We have completed development of our second-generation system, which is used in the hospital today. We initially focused on improving the administration of a medication at the bedside, starting with extensive human factors testing and focus groups with nurses. Nurses have told us that they prefer a hands-free approach at the bedside. Since they already carry medications, charts and IV bags to the bedside, an extra piece of technology would be difficult to carry as well. In response, we have developed a solution that provides a rich display of information on a color-touch screen computer at the bedside, always accessible for the nurse. We can run our software on a variety of other forms of hardware at the bedside — including laptops, hand-held devices, and so forth. We will either provide the hardware to the hospital or work with the hospital’s existing hardware. We are also working on other applications appropriate for mobile clinicians like pharmacists and doctors on a hand-held device. We found that the nurse needs a greater density of information at the bedside. In contrast, the pharmacist may just need a list of patients getting certain medications that they want to follow. This lends itself well to a portable device. The technology is Web-enabled so that a physician can view a medication administration record for a patient in the home or in the office, as long there is Internet access. A valuable part of our business is the information that we generate. We have created some very powerful analytic tools to allow healthcare providers to review medications that patients are receiving in the hospital for appropriateness of therapy or costly outliers. We designed our system to aggregate information to look at important trends but also retain the confidentiality of the patient. There are significant market opportunities for how medications are used in institutions that could be very valuable to other markets.

TWST: Is the technology proprietary to Bridge? Is it patented?

Mr. Grotting: Yes. We have patents for our technology.

TWST: Can you tell us more about Bridge’s competitive advantages?

Mr. Grotting: First of all, we have 15 months of live usage of our system on patients, which gives us a first-to-market advantage. We know that clinicians really like our solution — it is easy to use and fits within their workflow. We also have a very rapid implementation timeframe. Traditional healthcare information technologies can take as much as a year and a half to implement; Bridge can have a live system up and running in four to six months. The hospitals benefit because they can’t afford to wait a year for clinical and economic results. Our dedicated focus on the organization of the clinical information that comes out of the system provides a real opportunity for our hospital partners to quickly improve their medication processes and reduce both errors and cost. In the long term, this advantage could be an additional source of revenue for the hospital as well as for Bridge.

TWST: What are the major concerns or risks that Bridge faces?

Mr. Grotting: Probably the biggest challenge is keeping up with the increased sales demand since the release of the Institute of Medicine report on medical errors. We’ll have 2,100 clinical system users by year-end and we’ve got additional contracts for 14 customers that will represent another $20 million in potential revenue to us. The institutions that we are going into are connected to larger systems, so there are over 130 hospitals represented in those systems. The shortened sales cycle requires a faster ramp up of resources than we originally anticipated. Managing rapid company growth is the challenge. We are starting to introduce the company more publicly at investor conferences, like the Piper Jaffrey conference. We are starting to raise money in a mezzanine round to help us build the sales and implementation resources to respond to a greater demand than we had originally anticipated.

TWST: Is your management team equipped to handle your strategies?

Mr. Grotting: We have been very fortunate to put together an all-star team to date. Rusty Lewis, a very seasoned professional in this industry who came directly from McKesson HBOC as the Chief Technology Officer, really understands the healthcare and technology market. Donna DuLong, our Vice President of Marketing, has an extensive background in the healthcare information industry as well as a clinical background in nursing. Bob Krist, our Chief Financial Officer, is a very seasoned healthcare CFO and has experience with public offerings. Gary Aden, representing sales and corporate relationships, has extensive relationships with healthcare executives. I have spent 26 years on the care delivery side as a COO or CEO of healthcare systems and bring a deep understanding of how the customer thinks as well as a network of extraordinary relationships.

TWST: What are you planning, in terms of marketing and sales strategies, in the future?

Mr. Grotting: Although we have a direct sales force, we will continue to develop important strategic relationships that can increase distribution and product offerings. Our relationship with Premier, one of the largest hospital group purchasing organizations in the country, represents over 1,700 hospitals. Premier has partnered with Bridge on a clinical initiative involving over 137 of their shareholders to reduce medication errors. They have surveyed the technology available in this space and have selected Bridge. They have also recently made a $5 million equity investment in the company. We have also worked closely with several industry leaders who are instrumental in leading efforts to reduce medical errors — including the American Hospital Association, Institute for Safe Medication Practices, the National Patient Safety Foundation, and others. Our marketing efforts will include publishing and promoting the positive clinical and financial results obtained from the use of the system.

TWST: Do you have plans to expand internationally?

Mr. Grotting: We are currently focused on the US market; however, we recognize that there are significant opportunities abroad and will consider that possibility in the future, especially through a distribution partner.

TWST: Where would you like to see the company in three years?

Mr. Grotting: Bridge will be a strong, focused company with a broader product offering through collaboration with other healthcare technology and service providers. Over the next year we plan to raise additional capital, probably through a public offering, in order to continue rapid growth. In addition, I anticipate that we will provide several alternate market offerings.

TWST: If you were sitting down now with a group of potential investors, what reasons would you give them to invest in Bridge?

Mr. Grotting: Rarely in this industry has an issue like medical errors captured and retained the national media focus. Bridge has a leading first-to-market technology solution that is well liked by clinical users. We have built the company with a strong clinical and technology orientation and have hired people that really know this space well and are very mission-driven. The market opportunity is substantial — well over $3 billion.

TWST: Who are the current investors?

Mr. Grotting: We have been venture-backed by a really outstanding group of venture firms: NEA, Sierra, Nassau Capital, Halpern & Denny, General Motors, Coral, a venture out of Minneapolis. We have an outstanding, engaged Board of Directors — people who have a real understanding of this business.

TWST: Thank you.

JOHN GROTTING
President & CEO
Bridge Medical, Inc.
120 South Sierra Avenue
Solana Beach, CA 92075
(888) 578-0100
(858) 314-5680 - Fax

Each Executive who is the featured subject of a TWST Interview is offered the opportunity to include an Investors Brief or other highlight material to be provided and sponsored by and for the company. This interview with John Grotting, President & CEO, Bridge Medical, Inc., is accompanied by an Investor’s Brief containing corporate information.

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