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Every year, some 7,000 patients die in hospitals in the United States as a result of mistakes in their treatment by the medical staff. This alarming finding was published four years ago in one of the American medical journals and prompted the American health system to seek ways to prevent errors occuring in the treatments given to hospital patients.

The Israeli start-up company, MDG Medical, thinks it has found the solution, at least to one aspect of the problem - the distribution of medications.

"In Israeli hospitals, the medical staff conducts daily visits to all the patients and the senior physician writes a list of medications that each patient is to receive," explains MDG CEO Dr. Gilead Asseo. "The nurses try to understand the doctors' handwriting, which is not always particularly clear, and copy the orders into the orders book. The orders are then copied again into the medications book.

"At this point, the head nurse of the ward goes to the medicine cabinet and begins taking out the required drugs. She then puts each dose of medicine in a cup and labels each cup with the name of the medication. The drugs are distributed from a wobbly tea cart. At best, the patient does not receive his medication; at worst, he gets the wrong medication."

Asseo is a surgeon by profession and recalls that in 1961, there were 600 drugs on the hospitals' lists. Today, there are close to 25,000. "The doctor cannot remember them all, even if he wants to; he needs a computer to help him."

Sources at MDG say it is no wonder that so many patients are harmed by taking the wrong drugs when there are so many opportunities for errors in the drug distribution process. This is why the company developed a closed system that its developer, Dr. Bat-Ami Sadan, claims will computerize one of the hospitals' most exhausting processes.

The system is based on a tablet PC and includes a program for recording the names of all the patients in a ward, the medications they are to be given, and how the drugs are to be administered.

The doctors enter all the orders, including how often each drug is to be given, while the second stage of the system involves connecting the tablet PC to a central server that relays the orders to a computerized medicine cabinet, that has a drawer for each drug. When the nurse enters the patient's name on the cabinet's console, the appropriate drawers open automatically. The nurse then puts the drugs on a cart that is also computerized and has drawers for each patient, with the patient's name displayed on a small digital screen built into each drawer.

Thus, the nurse goes through the ward list, patient by patient, and fills up all the drawers. When she gives the medications to the patient, she has to type on the cart's keyboard that the patient has received the drug.

At this stage, MDG's system is undergoing field trials in the geriatric rehabilitation department of Sheba Hospital in Tel Hashomer. The trial is due to finish in April and Ichilov Hospital has already voiced an interest in the system.

Zvi Levinhar, MDG's marketing vice-president, says that Sheba plans to equip other departments of the hospital with the system. MDG has also signed a contract with Hammersmith Hospital in London and with BioEnterprise, an American company that was set up by medical centers in the Cleveland, Ohio area.

"We expect to sell 20-30 systems in 2003 and to reach profitability in 2006," says Levinhar.

Off the record, MDG says that the best case scenario would be if the company were to sell some 800 systems in Israel. An average system costs about $100,000. Sadan says that even though the hospital staff is hesitant about using technology, they know that they can no longer manage without it.

"The doctors recognize that the time has come. They know that they have to take advantage of the assistance that technology offers."

Till now, MDG has raised $2 million from the international LSKW investor group, which includes Ron Lauder, David Khalili and others who are represented in Israel by InQsoft, headed by Israel (Izzy) Tapoohi, a former Bezeq board chair and a former chair of the Africa-Israel investment group.

Tapoohi says that the group decided to invest in MDG after being convinced that there was a real market need for MDG's solution. "Many Israeli companies develop technology and then look for a market. In this case, the market is screaming for a solution, and we have it."

Tapoohi notes that the company didn't invent anything revolutionary. "The medical software exists; computerized cabinets have been used by the air force for years. What MDG did was to provide a closed system that uses these developments to meet the [market's] need," he explains.

Tapoohi added that the company would soon be embarking on a $6.5-million round of fund-raising, assisted by BioEnterprise. Asseo says that the fresh capital will go toward further development of the software, the carts and the cabinets, as well as the start of the marketing effort in the U.S., Europe and Israel.