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No Surgical Sponge Left Behind: RF Surgical Seeks to Lead Market for High-Tech Gauze

Xconomy Seattle — 

The lowly surgical sponge is one of the basic commodities all hospital operating rooms need, and which most just buy in bulk from the cheapest suppliers they can find.

But to RF Surgical Systems, a Bellevue, WA-based company with an engineering center in San Diego, there’s a lot more going on in surgical sponges. The company is seeking to build a whole new market with radio-frequency tags embedded surgical sponges that will make it so doctors and nurses no longer have to scramble around counting dozens of sponges after the end of an operation, hoping they didn’t leave any material behind inside the patient who just got sewn up.

More than 20 million people undergo surgery each year in the U.S., according to one 2005 estimate from Stanford University. It’s hard to know how many surgical sponges are consumed every year in the U.S., but depending on blood loss in emergency situations, it’s not uncommon for a surgeon to go through 20 to 60 of them, according to RF co-founder Jeffrey Port, a heart/lung surgeon at New York Presbyterian-Weill Cornell Medical Center. Data is a bit sketchy on how many sponges actually get left behind by accident, but it happens an estimated 3,000 times year, according to the federal Agency for Healthcare Research and Quality.

More often, nurses get placed under lots of stress, and a lot of precious time gets wasted when a post-op count goes wrong. When a sponge does get left behind, the lawsuits, of course, will follow. (I found one of these painful stories in a recent Miami Herald piece.) RF Surgical’s bet is that hospitals will pay a little bit more for sponges with radio-frequency tags in them. Any tags left behind would trigger a wand waved over the patient to emit a sound, so a quiet sweep would provide peace of mind for the surgical team.

Jeffrey Port

Jeffrey Port

The market for this invention? Possibly $500 million to $1 billion a year in the U.S., Port says.

“We’re talking about really solving this problem,” Port says. “I think we will see not a single retained foreign body left behind after surgery in three years.” It won’t be easy, he adds: “It makes a lot of sense, but we have to show it works. No one will mandate it.”

The idea of using radio-frequency tags has been around for a long time as you can see from this list of patent references, and even though the surgical sponge problem is so notorious, no one has built a big business on the concept yet. Port, who co-founded RF in 2005, was inspired to do something about the problem late in his surgical residency at Bellevue Hospital Center in New York, the oldest public hospital in the U.S. He was fascinated by how so much gauze went into patients, and how nurses had to track it all manually, all in the chaos of an ER. When the count didn’t add up, a patient might lay in the operating room for 45 minutes on a ventilator waiting for an X-ray machine to look for the missing gauze inside. The scans were sometimes read by someone late at night, who didn’t always get a consistent readout. “I felt something better had to be done,” Port says.

Port, the medical guy, found his co-founder in William Blair, the engineering guy he needed to pursue something tangible that might work. RF, which has now raised $20 million in capital to date, got some of its early financing from medical device industry veteran Kevin Cosens, Port says.

The company won its FDA approval in 2006 to start selling a surgical sponge with a radio-frequency tag inside. The engineering had to be solid, the tag had to be small, it needed to be compatible with all other electronic devices in the operating room, and could add only minimal cost to a sponge, Port says. One of the key engineering tricks the company pulled off was use of simpler radio-frequency tags, not better-known RFID tags, which have more expensive components that can store data, Port says. So far, RF’s system is used by more than 100 hospitals around the country, including the University of Pennsylvania, University of Southern California, and University of San Diego. The company has 32 employees.

The first generation of technology required the wand to be waved over the patient, to pick up radio frequencies that would be emitted by a sponge if it’s there, Port says. A newer version of the technology, being released this week, eliminates the wand, in favor of a gel-pad that’s on the operating room table, so a nurse only has to push a button to perform the scan for lost sponges.

The base equipment is provided to the customer for free, Port says, and the idea is to make money on the disposable sponges. The price of the sponges varies, but it typically adds about $12 to $15 of extra cost per operation, Port says.

That has proven to be a difficult sales proposition for RF in a down economy, when hospitals are looking to shrink their budgets, not increase them. The company has to go through a long sales cycle, because even when a surgeon decides he or she wants the new sponge, the decision has to go through hospital administrators and risk management departments, Port says. There are competitors out there as well, including Irvine, CA-based SurgiCount Medical and Pittsburgh, PA-based ClearCount Medical Systems, although Port says RF has established itself as the market share leader.

One of the big challenges, of course, is proving to doctors and hospitals that they need to change what they are doing in this era of evidence-based medicine. There are already a lot of mandates hospitals need to comply with—like with electronic medical records, say—so there’s limited appetite in some places to do new things that aren’t required. And since the problem itself isn’t very well documented, RF has sought to support some studies to clearly show the benefit of its technology.

Without going too far into the data, RF presented one study of 3,500 patients in September at the American College of Surgeons Clinical Congress in Washington, DC. The Association of Perioperative Registered Nurses also came out in July with new practice recommendations suggesting that operating rooms consider using RF tagged sponges.

That may be a start, but it sounds like a lot more work will need to be done to prove to hospitals that the technology can save them time, money, and legal liability before they will switch sponges en masse. So far, RF Surgical has found growing support for its approach, and has seen its revenues climb 50 to 100 percent each year for the past three years, Port says. But that’s still nowhere near tapping the full market opportunity.

“It’s a tough, tough slog in terms of the economy and getting hospitals to look at new programs,” Port says. “This is about getting hospitals to understand this is something they need to do.”