A company's devices aim to change the nature of Healthcare Delivery

Medical Device & Diagnostic Industry Magazine
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An MD&DI December 1998 Column

SNAPSHOT

A 1995 inductee to the Chicagoland Entrepreneur Hall of Fame, K. Shan Padda was nominated, among other reasons, for having successfully launched his third start-up company by the tender age of 27. Before cofounding Sabratek Corp. (Niles, IL), Padda had already sold his interests in his first two companies to his partners after two and three years, respectively, and spent a year in China and Southeast Asia. Was he full of confidence, dreaming of new frontiers to conquer once he got home? Not exactly. The plain and simple truth is that he was bored.

K. Shan Padda found an industry that keeps him from being bored at work.

So what made Padda think that the third time would be the charm—let alone give him the confidence to summon the commitment of energy and time it takes to start a business? As he put it, at 27 he felt "too old to run a software company and too young to run a medical device company." Feeling at odds with his future, Padda realized that he was able to listen to what others needed and that he was creative and flexible in looking for new solutions. And that he wanted to help people.

So when they decided to tackle the concept of the virtual hospital room and attempt to change the face of long-term care, Padda and Sabratek cofounder Doron Levitas listened carefully. They learned that one reason why healthcare is so expensive is that 70% of the cost is for labor. The two men wanted to find a way to reduce the amount of labor necessary while maintaining the quality of care.

"The first year, we did nothing but run around to CEOs, healthcare providers, nurses, and doctors, and asked them to put aside any perceived limitations and to simply tell us what they really need," says Padda. "We wanted to recreate all the functions of a hospital, where medical personnel interact with patients, oversee complex therapies, ensure patient compliance, make sure the therapies are not killing the patients, and monitor how the therapy is affecting the underlying disease state."

Sabratek's aim is to create devices that are "perceptive" and "intelligent" but also user-friendly. Examples of such devices include stationary and ambulatory infusion pumps with multiple-language capabilities and remote communications and preprogramming abilities. A Sabratek software system oversees the remote programming, monitoring, data capture, and reporting that the infusion pumps undertake, and a portable, automatic diagnostic tool performs on-site testing of the infusion devices.

These devices can be linked via intranet to monitoring stations where a patient's status can be closely monitored without someone having to physically spend time visiting them for routine checkups. This frees up medical personnel and also provides patients with some independence and ability to move away from a hospital setting into an alternative-care site or even back home.

"A technophobe can use these devices," insists Padda, "so there is a high patient-compliance rate. The stuff we're developing is pretty cool technically. I like to interface with R&D, and I like thinking that something I'm doing is improving the quality of life for people."

Padda says that the biggest obstacle he faced while getting Sabratek up and running was that the company was trying to "fundamentally change the way healthcare is delivered. It was a challenge to get the marketplace comfortable with using technology to make the process more cost-effective. Change is difficult, because we all want to keep doing what we're used to. You have to look at and challenge all assumptions."

The other major problem for the small, unknown company was competing against giants such as Baxter and Abbott. Sabratek struggled with its initial finances with only the aid of a few small venture funds and some high-worth individuals. The only big corporate sponsor it managed to woo was Blue Cross/Blue Shield. "We were too stubborn—or stupid—to give up," Padda says with a chuckle. "Basically, everybody had written us off. You know it's bad when your mother asks you why you're continuing to do something."

Those days are long gone. In 1996, Sabratek went public and has continued to grow. However, Padda has been around the block too many times to take his success for granted. He knows that the company must continually reinvent itself to meet the demands of the industry.

Sabratek is full of hard-working, committed people, Padda explains. One reason is that most of them have stock options: "Everyone is focused on providing value to the customer. If something isn't successful, I want 500 people in addition to me who aren't sleeping well at night.

"Life is meant to be a constant, interesting challenge," he says. "The only credit we deserve is that we went out and executed the customer's wish list. We gave the marketplace what it was asking for."

Jennifer M. Sakurai is managing editor of MD&DI.

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