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ALR Technologies is
preparing to make commercially available the ALRT500 and Home Health System, a disease management
compliance reminder and monitoring system that allows healthcare providers and caregivers
access to monitor a patients compliance to their medication regimen and intervene
Patient adherence to medical disease management treatments and activities are contributing
to more than $140 billion dollars annually in excess healthcare costs
ALR Technologies Inc.
114 M. Reynolda Village
Winston-Salem, NC 27106
President, Director and
Member of the Audit Committee
Interview conducted by:
Walter Banks, Publisher
February 23, 2006
Mr. Stanley Cruitt
Pres, Director and Member of Audit Committee
Stan Cruitt joined ALR Technologies as President in 2000,
bringing with him more than 20 years of experience in the pharmaceutical industry. He
became President at a key point in the Company's history, when ALRT was evaluating its
products and considering innovative uses for medication reminders throughout the
healthcare community. Mr. Cruitt has extensive experience in the pharmaceutical industry,
where he has held numerous positions ranging from serving as a marketing research analyst
with Merck to top marketing and management positions with Ciba and Novartis. In
1996, Newsweek and Advertising Age recognized him as one of the top marketers in the United
States. Mr. Cruitt's experience at building brands, markets and business is a needed fit
for ALRT. Mr. Cruitt received his undergraduate degree from Southern Illinois University
and received academic honors during graduate study.
ALR Technologies Inc. (ALRT or the company), headquartered in Winston-Salem, N.C., is a
pioneer in the emerging compliance management area of the disease management industry.
ALRT is publicly traded on the OTC Bulletin Board under the symbol ALRT.
The company is focused on enhancing its position as a developer and distributor of
technology-based, clinically proven medical reminder products and compliance
monitoring and health intervention systems in the health care industry. The companys
products have been developed to address the growing problem of patient adherence to
medical disease management treatments and activities that contribute to more than $140
billion dollars annually in excess healthcare costs.
CEOCFO: Mr. Cruitt, will you tell us how long you have been
with ALR, and the changes you have seen since you have been there?
Mr. Cruitt: I have been with ALR Technologies for five
years now. I was brought in at a stage when ALR was looking at the type of products and
services that could benefit various targeted populations in healthcare. When I say
healthcare, I mean specifically the compliance and monitoring of disease management
treatments and activities. ALR had a wonderful concept and software product that they were
developing. I believe in consumer research and market research, so we introduced marketing
research to ALR Technologies which allowed us to discover exactly what products and
portfolio are needed in the healthcare market of today. I will tell you a bit about those
products in a minute. When I came in, we set out a course of marketing research activities
to find out what our research and development focus should be directed towards. We came up
with the answers and spent the past five years working to get a very important product and
system into healthcare, the ALRT500 and Home Health Monitoring System. A product which
will assist in the compliance of disease management activities and allow for remote
monitoring of that compliance, at the patient level.
CEOCFO: Is it remote
monitoring as well as onsite monitoring?
Mr. Cruitt: It is remote monitoring, but onsite it will
remind a person the exact actions they are to do. It displays on a screen the medications
or treatments they are to take, dosages, and at the appropriate time of day.
CEOCFO: Can you describe your product and what a client would
be receiving when they get your product?
Mr. Cruitt: That is a great question, because our
product was designed to for ease-of-use for the user, and the user in this case is a
patient. Lets take for example a patient that is a diabetic, and they have to take a
multitude of diagnostic tests, and/or medication throughout the day, everyday of their
life. Our product is a small hand-held device, somewhat comparable to a PDA (Personal
Digital Assistant) but it was built to be easy-to-use for anyone regardless of their age
or experience. The hand-held device will remind a person to take the necessary actions. It
is small and compact, can be carried in a pocket, and clipped to a belt, and there is a
flip stand, so it can be set on a shelf or countertop. At the appropriate times during the
day, this ALRT500 is a compliance reminder and it will start beeping at the time the
person is to perform a disease-management action, such as taking a specific medication.
They go over to the unit, or if they have it on them, they look at it, press the button to
silence the alarm, and then on the screen is displayed the exact actions they are to take.
Maybe in this case it is to check blood sugar or record blood sugar level, take one dose
of med-A and maybe one dose of med-B, whatever that medicine may be.
CEOCFO: Would they press
a button to notify the device when the action has been taken?
Mr. Cruitt: They press a button to acknowledge being
reminded and correlation studies have been conducted that show that whenever a person
acknowledges being reminded, they are taking the necessary actions. The correlation is
very high that they do follow up and take the appropriate action at that time. This type
of an activity takes place maybe three or eight times a day that a person has a reminder
to take specific action. It depends on their disease state and level of their chronic
condition. The remote monitoring service could be utilized by a case management company, a
medical clinic or it were a child with an elder parent that wants to monitor to be certain
that their parent is taking the necessary courses of action.
CEOCFO: How does the transmission of information work?
Mr. Cruitt: The ALRT500 is connected to a modem that
transmits the data automatically, through a hardwired phone jack. Every night it is
automatically uploaded into a secure central server, and those registered third party,
will receive the data and monitor the compliance. Every morning when they go on line, they
will receive an email as to whether anyone they are registered to monitor was
non-compliant over the previous 24 hours. They just click on a URL that takes them to a
secure site where they put in their security code, name etc. and that allows them access
to the data. Lets say it is a medical clinic and they are monitoring 50 people; the
summary page will highlight three of those 50 people were non-compliant the previous day.
That will allow them to go directly to those three, drill down, and review at what level
of non-compliance, what medications or what activity they were non-compliant with. They
can then follow-up with a phone call for more real-time intervention if needed.
This is the whole crux of the issue; the problem with non-compliance in disease management
activities is very prevalent in the U.S. This leads to a person not taking the medication,
not taking the activities or treatments, and when they do not, their health can fail or
they do not improve. When they do not improve or their health starts to fail, that leads
to an ER visit, escalating costs and a worsening health condition. This is one of the key
contributors to escalating costs in healthcare in the United States. It is estimated that
over $140 billion annually in excess and preventable costs are due to just medication
non-compliance. In addition, this number is higher when noncompliance of treatments and
diagnostics are included.
The problem is very prevalent and very costly to health and to society in many ways. We
have had a clinical trial conducted with Columbia University, with a specific population,
with a given disease state, which showed a very significant increase in compliance through
the use of one of our early medication reminder products. The increase in compliance for
example, was 97% increase in the percent of people that were taking 100% of their
medication everyday. The time of day, is also very critical depending on the disease
state. This study also showed 168% increase in the percent of people taking their
medication at the correct time of day. Our products have been used and shown to truly
improve compliance. Now with our home-monitoring system, the ability to intervene when a
person is not compliant, adds even greater value to that patient and to the insurance
CEOCFO: It is clear that
you have a device that is greatly needed. When will it be available and do how you intend
to bring it to the market?
Mr. Cruitt: The ALRT500 and our Home Health monitoring
system will be available commercially in third quarter of this year. We have focused our
resources on developing the ALRT500 and the Home Health Monitoring System. It has been out
in pilot programs and will be in additional pilot situations with commercial customers
over the next few months. We will embark on a marketing and PR campaign as we near the
introduction period. During the process of developing this product and system, we have
also generated some spin-off products; whether it be a very simple medication reminder for
a person using a weekly medication or using a once-a-day medication. We have generated
sales; but not a substantial amount of sales considering that we have not marketed these
products at all due to our focus on developing the ALRT500. Word-of-mouth has led some
companies to contact us and say we hear that you have these products and we see a place
CEOCFO: Do you see insurance providers, healthcare providers
and big pharma embracing your product?
Mr. Cruitt: People with chronic conditions need our
products; a high percentage of people, around 40-50% are non-compliant with treatments and
medications, which leads to worsening health conditions, so I expect the big
pharmaceutical companies, health insurance providers and the disease-management companies
will embrace them. We have been in conferences, discussions, meetings, for some time now
with several key disease-management and healthcare providers and home care service
companies. The discussions take on a similar course; the comments are that the system is
almost a no-brainer, and that patients and clients need this. The return on investment for
a healthcare provider, a payer for health insurance; they could stand to gain several
thousand dollars a year per patient in reduced cost of care depending on the disease
state. Although a compliance system may not be necessary for everyone, there are millions
of people in the US who could benefit, whether it be for organ transplantation, severe
diabetes, severe asthma, heart disease, anxiety disorders or chronic obstructive pulmonary
disease, referred to as COPD (Chronic Obstructive Pulmonary Disease).
There are several different disease states where the reduction in cost of care to a health
insurance provider could and should be a thousand to several thousand dollars a year
easily. A study was conducted by the state of Missouri with their health service
department on Medicaid patients, who are diabetic. It was conducted in conjunction with a
medication reminder product. The average cost savings and reduction of cost of the group
that was using the medication reminder, was $3,400 a year versus the control group that
did not receive the medication compliance device. There is already substantial amount of
proof out there that increasing disease management compliance will lead to significant
reduction of cost of healthcare in the US, and I personally think this is one of the
missing stories, and a powerful story, that has not been told. As we near our product
launch, we will be applying resources to get this story out there effectively.
CEOCFO: Do you have a
Mr. Cruitt: We are a corporation that contracts out to
third parties to keep overhead down at this stage in our company development. We have
contracted with key individuals in companies to assist us in the marketing process. Our
network of consultants know this business and we have a focused marketing strategy.
CEOCFO: Will you tell us about competition and what separates
you from them?
Mr. Cruitt: Even when you are coming up with something
relatively new, and there is an untapped and undeveloped market, there is always
competition. There are a few competitors out there that currently have what we call a
home-monitoring system; these systems are very situational specific and the type of data
that these systems monitor and provide meets a different need than our system. We provide
services and additional features that will allow us to serve a greater population. I will
give you an example; lets say it is a congestive heart failure population, some of
our competitors address the needs of the 10% most needy and most severe conditions, we
address almost the same needs for that 10% but we also address needs that can be very
valuable for another 50% or more. Not everyone needs compliance reminders and not everyone
needs their compliance monitored. We provide the services that would fill and meet the
needs for a much broader population. Although competitors can change their direction, and
there is no doubt that will take place as the market growth potential becomes apparent, I
have to say I personally welcome some level of competition in a new and emerging market.
Competition can help spur the growth. And were confident that our
pricing, our price is also more than 50% less than the next lowest competitor, will allow
for more customers to embrace our system. Also, as far as providing differentiated
services, we have the only monitoring system available in the world that will monitor a
COPD patients use of a nebulizer compressor for the delivery of medication. A person
with chronic obstructive pulmonary disease; and there are more than 16 million in the US,
with more than 4 million of them using the nebulizer everyday for the rest of their lives.
They have to use a nebulizer compressor to maintain quality of life and to prevent
deteriorating conditions due to lung disease and noncompliance with the use of nebulizer
compressors is especially poor. We have patent pending on this and are confident we will
receive significant patent protection. This system will be coming out along with our
ALRT500 and Home Health Monitoring System. The home monitoring system will allow for the
monitoring of the use of a nebulizer.
CEOCFO: Will you tell us
about the manufacturing of the device?
Mr. Cruitt: We utilize contract manufacturing. The
chairman of the company; Sidney Chan, has an extensive network of relationships with the
industrial, and manufacturing sector in China near Hong Kong, the Pearl River Delta area.
With all these connections, we are able to gain favorable pricing for materials
procurement and for manufacturing. Likewise, manufacturing capacity will not be an issue
for us. Therefore, we are very pleased with our relationships and well situated from a
CEOCFO: Do you have the
funds to cover your company until you get your product to the market?
Mr. Cruitt: We are in the process of raising additional
capital and have been very effective at doing so over the course of the last five years.
Sidney Chan, myself as well as our families and close associates, have funded most of the
capital needs of the company and we will find the capital as we need, to get this product
on the market, whether through strategic alliances with companies that provide
complementary services or through an equity placement.
CEOCFO: Will you tell
potential investors why they should consider your company?
Mr. Cruitt: If you look at the disease-management
industry ten or fifteen years ago, disease-management was in its infancy. The disease
management market was in the same place then as home compliance and home compliance
monitoring is today. Compliance also happens to be one of the most important aspects of
effective disease management, and it is the missing part of disease management today. The
ability to remind the person to take the activities they are supposed to and to monitor
those activities. The potential size of this market is staggering; just look at the
millions of people who are taking medications and treatments for chronic conditions. Most
of these people could benefit from improved adherence to these treatments. The
disease-management industry itself, over time, very quickly grew into a multi-billion
dollar annual industry. We believe that a similar type of growth will take place with this
new emerging market of health compliance and monitoring in the United States. And ALR
Technologies will be a leader in this market.
CEOCFO: Will insurance
providers see the advantage of covering your device?
Mr. Cruitt: Part of the certainty of the growth and the
rate of growth in this market, will be for the health insurance providers to understand
and accept the return on investment for their respective business. For example, a health
insurance payer, if they see that a $400 (four hundred) a year investment would generate
on average anywhere from $2,000 (two thousand $5,000 (five thousand) a year in reduced
cost per targeted plan member, well that is what drives the speed of the growth of this
marketplace. And not to forget the most important factor; the improved health outcome of
the patient. And Im pleased to say that the insurance providers are beginning to
recognize the potential ROI and health benefits.
We are also talking to some major corporations that
are self-insured. They are clearly in the business of generating revenue and earnings and
because they are self-insured, if they see a way for their health benefits department to
lower cost of care, with a $400 investment per targeted employee or family member,
generating a $2000 to $5,000 savings annually for each of these targeted individuals; once
this return on investment is understood these self insured corporations will buy in.
Also consider the return on investment of a homecare
service provider. In providing our products to their patient population, they can gain
additional business and referrals from the medical clinics. This is because the clinics
and physicians will see that this is a standard of care that they have never seen before
and an added value such that the clinics will want to do business with this homecare
provider rather than a competitive provider.
Another important driver of growth and success that
is not so much return-on-investment, but it is the children of the baby boomer parents and
their desire to help keep their parents healthy. As the aging population is increasing; I
believe there are 40 million people in the U.S. that are 65 and older and that number is
going to increase greatly over the next ten or twenty years. People want to have a sense
of comfort that their parents are taking good care of themselves. Our product and system
is going to give them a tool that is going to add to their comfort level. It also gives
them the ability to pick up the phone and say hey mom, I just saw that yesterday, and for
the past week, you have not been taking your eight oclock a.m. medication or you
have not been checking your blood pressure as you are supposed to; please mom, start
taking better care of yourself. There are other ways for the child to intervene such as
placing a call to their parents medical clinic. Our ALRT500 and monitoring system is going
to give a person the ability to help their parents more in a remote situation. We are in
discussions with companies that market direct to consumers.
CEOCFO: There is also
the quality of life aspect!
Mr. Cruitt: There are many examples of this and one
unique one is with a mental health organization that is committed to using our monitoring
system. This is going to allow people that are at some degree of mental retardation, to
live in more of a real home situation rather than being institutionalized.
CEOCFO: In closing, I
would assume that you would only need to capture just a small portion of this large market
to be successful.
Mr. Cruitt: This is very true. It requires only a small
number of people to be on our monitoring system for us to reach a break-even point.
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