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August 23, 2011

Fla. company foresees growing popularity of medical dummies

By Michael Pollick
Sarasota Herald Tribune

SARASOTA, Fla. — Like one of its vinyl-coated human health care simulators, METI is getting its breath back after a near-death scenario.

Born and raised in Sarasota County of a giant defense contractor mother, METI has been on its own since October 2008, and has had a rough go of it, mostly because of the recession.

For this maker of expensive robotic dummies that are used to train nurses, paramedics and anesthesiologists, the recession meant that classroom sales that used to sail through procurement got tied up in budgetary purgatory.

With its staff now back to roughly its pre-recession size and with a highly efficient new plant, METI is preparing for a medical world that accepts human health simulators as a normal part of the curriculum instead of dismissing these fast-evolving machines as mere oddities.

METI is short for Medical Education Technologies Inc.

Baird Capital Partners of Milwaukee bought majority control of METI from L-3 Communications, the giant New York-based defense company that had nurtured the company since its birth in 1996 but found it no longer fit its portfolio.

Health care consultant Michael Bernstein, who advised Baird Capital to buy METI, had his facts right.

Here was an industry leader in a small but potentially explosive field: using life-like robotic dummies to allow health care workers to get hands-on-training without endangering real patients.

METI was one of three companies dominating the industry, and its ties to the academic world already were strong and promising — good signs for the local company's future.

For Bernstein, now METI's president and chief executive, it was like finding the health care equivalent of the LINK flight simulator as the aviation industry took off in the 1930s.

But just as Baird was writing a check — the amount undisclosed — for METI, the global economy, including the private investment business, was going into a tailspin.

"When that horrible economy hit in 2009, this company had never had negative growth before, but the economy shrunk," says Bernstein, who conveys a quiet intensity as he chats over a conference table in his spacious office.

"I was new to the business as the president," Bernstein. "And, you know, 'Welcome to METI, I have to lay people off.'"

A company that had been run as a fiefdom within the Sarasota County plant of defense contracting giant L-3 Communications since its inception in 1996, METI had never had layoffs before.

Complicating the equation, plans already were far along to move METI out of the cavernous L-3 plant on Cattlemen Road, where the defense contractor makes black boxes for airlines and does even more secretive work for the defense establishment.

In the old building, METI became crammed as it grew, with the result that the manufacturing work did not have any particular flow to it.

Everett Tucker, the METI operations chief who played a key role in designing the new work floor, said he never even saw the loading dock during the year he worked for METI in its old building.

The new building rationalizes METI's manufacturing work, with parts flowing in a logical way from digitally controlled bins of components on one side to completed simulators ready to be shipped at the other end.

"This building would not have been built if we knew what was coming," Bernstein said. "We could have managed in the old building for far longer than we thought.

"On the other hand, we moved into a new building with a new operations team who got to lay it out exactly as they wanted it to be, which we could never have done at the other place. Being in this building has made us more profitable today than we would have been if we had stayed in the old building."

The new building also means METI's manufacturing will stay put, as nearly as something like that can ever be promised in the world of business.

"So the Sarasota operation is safe, because we are so invested in this plant," Bernstein said.

He could double sales and the company's Sarasota County employment simply by adding a second shift at the plant at 6300 Edgelake Drive, near Bee Ridge Road east of Interstate 75.

Sales currently total $65 million a year.

With school finances in freeze mode during the Great Recession, the fallout at METI was brutal. Seventy-five, or about a third of the company's global work force of 250, lost their jobs.

"This was really a shocker," Bernstein said. "We were laying people off, even though the company was well managed, because of the economy. So it was very difficult to explain to people. I don't think anybody understood."

As Bernstein has rebuilt the payroll, he also has beefed up the company's staff in Europe.

Out of the current 240 workers, just under what the company had at the end of 2008, 180 are in Sarasota County, either making robots, fixing them or marketing them.

The other 60 are scattered throughout Europe, either making sales or providing support for the growing foreign legions of simulators.

Fifteen years after the first METI dummies began pretending to breathe, the human health simulator business is still in its infancy.

"Until the late '90s, simulators were kind of fringy. People would mostly not even know about it, or roll their eyes," said Dr. Paul Uhlig, a Wichita, Kan.-based cardiologist spearheading creation of a $14 million human-patient simulator lab there.

Those attitudes have changed dramatically in the past 10 years, and Uhlig now believes medical simulation is poised for the same kind of growth that aircraft simulators experienced.

Starting in the 1930s, the earliest flight trainers might not have provided super realism, but they did teach basics.

In health care, the traditional method for learning is apprenticeship: Students work with practitioners who know what they are doing, Uhlig said.

"This is time-honored, works well, and is the way things have been for 100 years," he said. "On the other hand, who are we learning on? We are learning on living patients who trust you and your mentor to do it right."

The modern business of human medical simulators stems roughly from the time when METI was launched using 11 patented features developed by doctors and scientists at the University of Florida. Even today, METI pays royalties to UF, Bernstein said.

He estimates the entire global business at $200 million a year in revenue, tiny compared with even other niche medical markets. "We are at $65 million in annual sales, and there are three of us of any scale," he said.

Norway's Laerdal Medical, the oldest company in the business, is roughly the same size as METI, Bernstein said. Miami's Gaumard Scientific is No. 3.

METI is working on new products, such as a child-birth simulator, and it has infant and child-size models in production. But the company believes its biggest gains will come from getting into more schools by making sure the textbooks include simulation as part of the course of study.

The first step in becoming more curriculum-oriented came in 2003, when METI started developing its own scripts for its robots to follow. For example, a supervisor might use the software on a laptop computer to tell the dummy to stage a heart attack, a stroke, or to act like an accident victim who is in shock.

For the first time, that meant that individual schools no longer had to develop their own methodology for using the dummies. It became more of a turn-key system.

Expanding on that theme, the company has teamed up with professors at Texas Woman's University College of Nursing in Texas and at Dartmouth Hitchcock Medical Center in New Hampshire to refine and expand its menu of scenarios for the dummies, building on the traditional way the two schools teach critical subjects.

Now METI is taking another crucial step in making its simulators integral to health care education. On May 23, METI formed a partnership with Elsevier, an Amsterdam, Holland-based publishing company that dominates the market for nursing school texts.

As Bernstein explains it, Elsevier wants to make its curriculum more interactive. So the publisher is embedding METI's simulation vignettes them in Elsevier's curriculum. The expected payoff for METI will come when nursing schools move on to the next editions of Elsevier's text books and digital learning curriculum. Then, they will find METI's scenarios for simulators built right in.

"We are in 25 percent of the nursing schools in America," Bernstein said, estimating Elsevier's curriculum is used in 85 to 90 percent of them.

"The obvious simulators to acquire are METI's, because we tie with Elsevier."

Copyright 2011 Sarasota Herald-Tribune Co.

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