PJ Solutions
Smart Container
For Automated Medication Dispensing
Business Plan
Draft v.1
February, 2005
PJ Solutions
Secure Medication Dispensing
Strictly Confidential
Page 1
Executive Summary 4
Product Description ............................................................................................... 4
Value Proposition .................................................................................................. 4
Market Opportunity ............................................................................................... 4
Competition ......................................................................................................... 4
Market Plan.......................................................................................................... 4
How we make money ............................................................................................ 4
Business Plan ............................................................................................................ 5
Market Description................................................................................................... 5
Key user problems/needs ...................................................................................... 5
Key market trends ................................................................................................ 6
Key market assumptions ....................................................................................... 6
Segmentation and size .......................................................................................... 6
Offering Description ................................................................................................. 6
What is the proposed offering ................................................................................ 6
Overview of the service ......................................................................................... 8
Technology architecture, platform components ......................................................... 8
Value Proposition..................................................................................................... 8
What is the value proposition ................................................................................. 8
How does it meet customer needs .......................................................................... 8
How is it positioned versus competition ................................................................... 8
Competition ............................................................................................................ 8
Major Competitors ................................................................................................ 8
Competitive structure of market, segmentation ...................................................... 10
Key competitors, offerings, strengths and weaknesses ............................................ 10
Go to Market plan .................................................................................................. 10
Channel strategy & mix ....................................................................................... 10
MARCOM plan (e.g. advertising, public relations, promotion, branding) ..................... 10
Third-party partners............................................................................................ 10
Business case ....................................................................................................... 10
Key business plan assumptions, ........................................................................... 10
Business model (i.e. revenue and cost components, component margins, mix) .......... 10
Revenue & profit forecast (at least three years) ...................................................... 10
Activity forecast ................................................................................................. 10
Required investments .......................................................................................... 11
PJ Solutions
Secure Medication Dispensing
Strictly Confidential
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Key financial metrics (e.g. gross margin, NPV, time to breakeven) ............................ 11
Resource requirements .......................................................................................... 11
Management team .............................................................................................. 11
Investment ........................................................................................................ 12
Key skills requirements, facilities, equipment, etc. .................................................. 12
Risks and Countermeasures .................................................................................... 12
PJ Solutions
Secure Medication Dispensing
Strictly Confidential
Page 3
Executive Summary
Product Description
Value Proposition
Market Opportunity
Competition
Market Plan
How we make money
PJ Solutions
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Strictly Confidential
Page 4
Business Plan
Market Description
We have multiple actors, who participate in the medication system alone, thereby creating a very complex
system and our approach to reducing error seems to center almost entirely on the concept of developing
and enforcing a series of rules.
Doctors and nurses, and to some extent pharmacists, don't have the necessary information at hand when
they are prescribing and distributing medicines and often depend on memory for dose/time and
medication interactions. In addition, stylistic practices continue to be accepted in the medical profession
that wouldn't be tolerated elsewhere. (Dr. Lucian Leape, Harvard School of Public Health, and Health
Sciences Division, RAND)
Key user problems/needs
Pharmacist
The hospital pharmacist ensures delivery of safe, effective and economical drug
treatment through:
1. Accurate dispensing and distribution of drugs
2. Ensuring the meds are in the correct form and dose
3. Liaising with physicians, nurses, and other health professionals
4. Overseeing quality checks to detect and prevent harmful drug interactions and
potential mistakes
5. Monitoring every stage of medication therapy to improve all aspects of delivery
Nurse
5 R’s:
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1. Right patient
2. Right dose
3. Right drug
4. Right route
5. Right time
The most effective way to minimize errors is to redesign systems using these human factors principles:
1. Reduce reliance on memory,
2. Simplify to the extent possible,
3. Standardize (e.g., doses, preparations, times etc.),
4. Use constraints and forcing functions.
(Dr. Lucian Leape, Harvard School of Public Health, and Health Sciences Division, RAND)
Key market trends
1. Bar-coding (patient, drugs)
2. Automated dispensing carts
3. eMed
Key market assumptions
Segmentation and size
AHA Data
#
Total # of
Hospitals
Beds
Small
2,709
139,633
Medium
2,133
393,768
922
417,573
5,764
950,974
Large
Offering Description
What is the proposed offering
The design objective is to produce an affordable, highly reliable, cassette based dispensing
system that can be replenished on-site or remotely to improve the efficiency of the entire
consumables supply chain.
The TDS model 1 is configured with a “T” shaped wall-mounted control unit and a pair of
removable consumable containers, which dock onto the control arms. The control unit
provides an electronic user interface for the operator / customer to enable dispensing of
selected medicines contained within the containers. The control unit provides access
instructions and authorization, security, transaction tracking and communication with the
PJ Solutions
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container modules. The containers are the most novel elements of this product, since they
are designed to be removable to maximize replenishment efficiency while maintaining a
continuous record of current inventory and dispensing transaction history. Use of advanced
material (muscle wire) to enable the ejection mechanism eliminates the need for solenoids,
motors and switches, and thereby greatly improves reliability, weight and production cost.
SmartContainers will accommodate up to 120 items (medicines } Every SmartContainer
incorporates a FlashRAM chip which tracks consumable inventory and communicates
availability of requested pieces in response to operator input.
The system control unit is equipped with a PCMCIA memory card, which maintains a history
of all transaction data. Each element of the system (both host and containers) has unique
electronic serial numbers, which are recorded, in the transaction files contained within the
SmartContainers and the host memory card. This allows containers to be replaced as
needed (from one shift to another as an example), without losing usage information, and
eases the task of the integrated supply chain of understanding current usage patterns. The
host memory card is removable (from a locked access door) and can be plugged into a
standard PC interface for transaction history downloads to popular applications such as
Excel. A sample program is supplied to the user to activate their PC to accept the memory
card data and display the information in Excel or Access databases
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Overview of the service
Technology architecture, platform components
Value Proposition
What is the value proposition
Reduction in medication errors through decreased reliance on human factors: PJ Solutions
dispensing system helps to automate the med passing process, helping to ensure that the
patient obtains the right med, right dose, right time, etc.
Integration of information across the dispensing pathway: PJ Solutions allows for tracking of
medication dispensing before, during and after the med passing process, as well as
integration with existing clinical medication and CPOE systems.
Increasing the efficiency of medication passing: Nursing efficiency can be increased using
the PJ solutions system by decreasing the hand-written record, decreasing the time involved
with use of blister packs, and decreasing time associated with disposing of “wasted meds”.
Decreasing the waste factor associated with medication dispensing: PJ Solutions deals
directly with the waste issue through use of recyclable medication cassettes that allow
return of unused meds to the pharmacy for future use.
How does it meet customer needs
How is it positioned versus competition
Competition
Growth in the automated medication dispensing market appears to be taking off. There is
still relatively low penetration of decentralized/automated cart systems. The definition of
“automated” has yet to be fully defined or worked through, however the number of
companies merging cart technology with information technology is increasing. Much of the
focus is on tracking and ensuring the proper dispensing of medication and providing
“secure” dispensing. These companies are trying to help their clients increase productivity
by allowing nurses to ‘take fewer steps’ and at the same time provide confidence that the
medications are the right medications for the right person at the right time.
Below is a list of companies that provide medication carts. As we look closer at each of
these we will provide in-depth analysis on those we find are providing cart systems we
would consider to be in our space.
Major Competitors
AmerisourceBergen
AutoMed is their division for dispensing
Cardinal Health - Pyxis Medstation
Lionville
http://www.lionville.com/carts_mobile.html#icart
Lionville sells iCarts - Point of Care iCarts™ are designed to support mobile computing and bar
code scanning. The iCart combines the security features of a medication cart with the
timesaving efficiency and error reduction of bedside computing and medication
administration.
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S&S Medcarts
http://www.medcart.com/partner_poc.htm
The Partner Cart Series Medication Carts provides controlled access and security by
supporting multiple User-ID access codes, providing graphical at-a-glance drawer status,
and automatically locking partially closed drawers.
The electronic locking system supports up to 500 programmable User-IDs; this allows the
SilentPartner Audit Trail™ feature to track when and who unlocks the cart and which
drawers are opened by that user. Because the cart knows which drawers are opened, a
graphical indication of drawer status can be displayed on either the touch-screen display or
within the Partner Display software, to help determine which drawers have not been
captured by DrawerCatcher™.
Artromick International
The Artromick Avalo IMC has a keyless lock system. A user pad allows for up to 5 different
4-digit access codes. They also promote a system called Pintrax access system where they
zone the different drawers on a cart and allow for different access capability depending on
the zone. Narcotic zone could open for 10 seconds and then automatically re-lock. All this
is programmable.
MedDispense
Med-Dispense provides decentralized automated medication dispensing systems for health
care facilities nationwide. Our systems are known for their low cost and high-capacity yet
compact design.
The dispensing automation that most facilities desire is simply out of their price range. MedDispense delivers an affordable, robust system that even the smaller hospital can afford.
Our systems use the latest interface technology, ensuring revenue capture as well as JCAHO
compliance at a surprising low cost.
Compared to other vendors, our systems are undoubtedly the most affordable on the
market today as well as the simplest to use.
• allow nursing access to medications with pharmacy control via centralized server
• reduce medication errors
• eliminate missing doses
• eliminate manual charge functions with interface functionality
• ensure accurate dispensing with profile interface
• enable freestanding functionality when network connectivity not feasible
Our software is the most intuitive dispensing system software available on the market
today. Our systems were developed by healthcare professionals who preserved the
objective of keeping training simple while preserving extensive functionality. Nurses can
typically be trained on our systems in less than 7 minutes.
Full interface functionality is also available through the HL7 standard, including ADT, billing,
profile, inventory, and formulary.
Because implementation issues that are involved with HL7 interface projects usually require
custom development and extensive site analysis, MED-Dispense employs a team of analysts
to serve as HL7 interface implementation specialists. These specialists will work with the
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medical facility and third party vendor developers on HL7 interface projects from the initial
design phase until the interface is installed and in production
MacBick (United Health Supply)
Evercart
MMI Medcarts
Harloff
Baxter
http://www.healthmgttech.com/archives/0504/h0504bar_coding.htm
Barcoding at the Bedside article of implementation in a MA hospital.
Competitive structure of market, segmentation
Key competitors, offerings, strengths and weaknesses
Go to Market plan
Channel strategy & mix
MARCOM plan (e.g. advertising, public relations, promotion, branding)
Third-party partners
Business case
Key business plan assumptions,
Business model (i.e. revenue and cost components, component margins, mix)
Revenue & profit forecast (at least three years)
$2,000 unit Cost
Small
Medium
Large
TOTAL
$195
$552
$0
$747
PBT
Revenue ($k)
$389
$1,104
$0
$1,493
$389
$828
$0
$1,217
-$433
-$312
-$250
$487
$1,104
$0
$1,590
$584
$1,380
$597
$2,560
-$241
$2,045
$4,966
$597
$7,608
$28
-$1,208
$5,000 Unit Cost
Small
Medium
Large
TOTAL
$487
$1,380
$0
$1,866
PBT
$350
Revenue ($k)
$974
$2,759
$0
$3,733
$974
$2,069
$0
$3,043
$966
$1,318
$1,217
$2,759
$0
$3,976
$1,429
$1,460
$3,449
$1,491
$6,401
$2,716
$5,111
$12,416
$1,491
$19,019
$6,780
Activity forecast
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Assumptions
# Hospitals
Beds/cart
Unit price
1 Cart per Unit
5,764
12
$ 5,000
Small
Small
Small
Medium
Medium
Large
Large
Large
Small
Medium
Large
TOTAL
year 1
1.0%
1.0%
0.0%
0.6%
year 2
2.0%
1.5%
0.0%
0.9%
Small
Medium
Large
TOTAL
116
328
0
445
233
492
0
725
Size #
Beds
6 - 24
25 - 49
50 - 99
100 - 199
200 - 299
300 - 399
400 - 499
>500
Percent
6%
19%
22%
24%
13%
7%
4%
5%
year 3
2.0%
2.0%
0.0%
1.1%
Units sold
233
656
0
889
Number
346
1095
1268
1383
749
403
231
288
Average
Beds
15
36.5
74.5
149.5
249.5
349.5
449.5
600
Potential
Number
of Carts
432
3,331
7,873
17,234
15,580
11,751
8,636
14,410
79,248
year 4
2.5%
2.0%
0.0%
1.2%
year 5
3.0%
2.5%
1.0%
1.9%
TOTAL
10.5%
9.0%
1.0%
5.7%
291
656
0
947
349
820
348
1517
1222
2953
348
4523
Required investments
Key financial metrics (e.g. gross margin, NPV, time to breakeven)
Resource requirements
Management team
Company ownership:
PJSolutions Inc is an S Corporation incorporated in the state of New York, the founding
principals and co-CEOs are Pete Schneider and John Veenstra. The company’s business
offices are at 51 Heatherwood Road in Fairport, NY, 14450. Telephone (585) 377-7889, and
fax at (585) 388-7986. This office is temporary located in Peter Schneider’s home –
business forecasts include provisions for a corporate office and prototype development
facility.
Founding Principals:
John Veenstra and Pete Schneider were senior managers with Xerox Corporation for a
combined 55+ years. During that period they held leadership positions in a diverse array of
assignments including product development and testing, remanufacturing, retrofit
engineering, reliability improvement programs, strategy development, program
management, process engineering, statistical control / measurement systems development
and customer / technical support center management. Both are certified Quality
Facilitators, skilled in the use of Systems Thinking, Quality Improvement Process and
Problem Solving. Educationally, John and Pete hold degrees in engineering and business
administration.
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Both were highly recognized within Xerox Corporation for their accomplishments; awards
included the President’s award, Special Recognition and numerous high achiever awards.
Beyond formal recognition, Pete and John were frequently invited to participate in high
profile task forces and presidential reviews
Over the last decade, John and Pete were commissioned by corporate management to lead
a global task force with worldwide representation from engineering, manufacturing, field
service, supplies, finance and distribution charged with capturing a $200 million
improvement in product improvement over 5 years. Systems Thinking approaches were
successfully utilized to exceed the target objectives; the key success factor was the ability
to transform concepts to production deliverables in months instead of years. These
learnings have been transferred to PJSolutions – this is evident in the rapid development
timeline for the TDS Model 1.
Investment
Partnership track
Grants
Other Investors
Key skills requirements, facilities, equipment, etc.
Risks and Countermeasures
PJ Solutions
Secure Medication Dispensing
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Page 12