Fort Smith man part of high-tech team

Michael Pyle is part of a University of Arkansas team that is convinced they have a high-tech solution to improving logistical operations at most hospitals. The team has not fared well at two intense entrepreneurial competitions, but is charging forward and has million-dollar hopes for their business idea.

The team-turned-startup-company is Pyle, of Fort Smith and a master’s of business graduate of the University of Arkansas; Nabil Lehlou of Morocco and a doctoral candidate in industrial engineering; Sampath Jagannathan, a UA master’s of business graduate and native of India; and James Grotjohn, who is from Waldron and serves as the new company’s chief financial officer.

RFIDeas LLC is the name of the business and “UtilizID” is the software it hopes to sell. And the concept is simple in that it has the “Why didn’t I think of that?” quality.

TAG TEAM
According to the business plan for RFIDeas, an average sized hospital has 150 bed and more than 25,000 pieces of equipment.

“Because hospital operations are complex, time sensitive, and high pressure, it is necessary to know exactly where equipment is at the time it is needed. Consequently, nurses ‘hoard’ equipment by hiding it from others, leading to under-utilization of equipment, traffic jams at inventory centers within the hospital, and lost personnel time due to tracking down items,” notes the explainer in the RFIDeas business plan.

The company uses radio-frequency identification (RFID) tags to solve the problem of efficient use and management of thousands of critical pieces of equipment. The small tags are placed on the equipment and a network of RFID “readers” placed around the hospital feed information — location, availability status, etc. — about each tagged item to computers used by hospital staff. Lehlou came up with the idea for the business after his work in the RFID lab at the University of Arkansas.

“When a staff member needs a wheel chair to move a patient, instead of spending time looking, he uses a terminal to locate the equipment and see its availability status,” noted the RFIDeas business plan. “UtilizID also uses optimization models to help personnel run their operations (resource scheduling, material flow, inventory control) more efficiently. For instance, UtilizID will solve the problem of allocating resources so that no two nurses go after the same piece of equipment.”

RFIDeas assert that the typical mid-sized hospital loses an average of $500,000 a year because of lost or stolen assets, and each nurse wastes about one hour a day looking for items they cannot find. According to a hospital simulation developed by Lehlou, the UtilizID software could result in annual savings of $1 million for a 150-bed hospital.

The cost of the system is between $300,000 and $700,000, with an average annual charge of $30,000 for warranty, maintenance and training, according to the company.

COMPETITIVE PRESSURES
In early March, Pyle, Jagannathan and Lehlou traveled — with financial support from Arkansas Capital Corp. — to Pittsburgh to compete in the McGinnis Venture Competition held at Carnegie Mellon University. Their UtilizID plan didn’t make the cut, but Pyle said the event was more than worth the effort.

“Despite our disappointment the experience was very beneficial. I have always been told that if you want to be the best you have to compete against the best and that is what our participation in the McGinnis Venture Competition provided us,” Pyle noted in a letter thanking officers of the Arkansas Capital Corp. for their support.

Pyle and the team competed in the recently concluded Donald W. Reynolds Governor’s Cup held in late April in Little Rock. With $114,000 available for prizes, including $20,000 for top prize, the event is one of largest entrepreneurial competitions in the nation. Again, the RFIDeas team did not capture the top prizes, but the process continued to push the company closer to reality.

“Personally this Governor’s Cup experience was not as satisfying as 2005 when my team from (the University of Arkansas at Fort Smith) won 2nd place and the Innovation Award,” Pyle told The City Wire. “However the year long experience at the UA with this team was on a much higher level. From the resources available to us to the meetings with angel investors, we have had a wonderful educational experience.”

SEEKING INVESTORS
The team is far from giving up on their business plan.

“After the disappointment of not placing at the Governor’s Cup we are doing what most struggling entrepreneurs do — we are seeking funding to put our first system together and in a hospital,” Pyle said.

RFIDeas signed on to be a client of Innovate Arkansas with the hopes of obtaining at least $500,000 in seed funding for the new venture. Innovate Arkansas, a joint program of the Arkansas Economic Development Commission and Winrock International, that attempts to merge technology entrepreneurs with financing and mentors.

The company’s business plan estimates the market for its type of service is about $3 billion a year with a growth rate of 6% a year. Within that market, RFIDeas believes it can capture enough business to record $67 million in revenue and $27 million in pre-tax income by the end of 2014.

Can they make it work? The team is confident, and they lay out a strong argument in their business plan.

“The American healthcare industry is in desperate need of mechanisms to reduce costs and increase efficiency of both equipment and employees. In order to keep track of billions of dollars worth of medical equipment, most of America’s 7,569 hospitals use either manual barcode scanners or paper systems. … Our product addresses all of these issues, allowing healthcare professionals to focus on their main priority: patient care.”