Company: Heartlab Inc.
Owners: Robert Petrocelli and Jonathan Elion, MD
Employees: 34
Location: Westerly
Year Founded: 1994
Annual Revenues: $7 million
ONE OF THE FOUNDERS of Heartlab Robert Petrocelli sits at one of the units.
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On the wall of the Westerly conference room, a poster reads: “The best way to predict the future is to create it.” That has become especially true for Robert Petrocelli, president of Heartlab Inc. For the last five years, Petrocelli, a physicist and computer scientist, and his partner John Ellion, a cardiologist, have been combining their talents to develop cardiac imaging systems.
Now in its sixth fiscal year, the company has grown to 34 employees, five regional offices and an associated company in Japan. Petrocelli said the company almost doubles its revenues annually, making more than $7 million during the last fiscal year, with a projected revenue for this fiscal year of between $15 and $23 million.
In this year’s Providence Business News survey of private companies, Heartlab was the second fastest growing company, with an increase in revenues of 326.16 percent from 1996 to 1998.
”We have been profitable since our inception,” Petrocelli said. “We average 10 to 12 percent of gross revenues a pre-tax net.”
And Petrocelli said his confidence in the company has been confirmed by its constant growth in the marketplace.
”We basically have been working along a five-year plan, which we constantly move forward along a five-year window,” he said. “I am a very strong supporter of the old cliché ‘planning your work and working your plan.’ It’s proven to be extremely accurate. We’ve made our sales and margin goals every year.”
Petrocelli called the company’s last fiscal year “a breakthrough” as more than 600 workstations, which allow doctors and hospitals to archive and network results of cardiac imaging, were installed in hospitals and medical centers across the country and around the world.
”We are primarily a software company but we have a complete project management group so we actually deliver the whole thing as a turn-key system,” he said. “We do it cradle to grave, but it’s our software that powers it and that’s the key. The boxes are a necessary evil.”
Angiography began in the 1940s as a way for doctors to image the blood vessels in the heart. The procedure then and now, consisted of introducing a catheter into the femoral artery in the hip and “snaking” the catheter up to the top of the coronary arteries, Petrocelli said. While that was being done, he said, the doctor injected a radio opaque iodine-based medium that illuminated when X-rayed.
The problem, Petrocelli said, is that when the procedure was first introduced, the only medium for capturing the X-ray was film. They had to make a movie of it.
”Imagine during this procedure there is literally a movie camera, which looks like the movie cameras you would picture from the ’40s with these big reels on top and it’s running during the process of X-raying,” he said. “Later when the doctor wanted to look at this he needed to have the film developed, and then replayed the entire thing for the surgeon.”
The invention of digital imaging in the 1980s was a significant advancement, Petrocelli said, because it allowed doctors to put a camera and a very big disc drive into a computer so they could play the images back right away. The only problem he said, was there was no way to record the data, because the systems would fill so quickly. As a result physicians were forced to erase the disc and use the film as a permanent archive record.
As a result Petrocelli set out to find a better way.
”My partner and I did a lot of consulting work in the early ’90s working on what we called ‘the Holy Grail’ of digital angiography,” he said. “That was a way to store all of this data efficiently and be able to play it back so physicians could make a diagnosis or maybe even transfer the information between hospitals.”
In 1995, in conjunction with the American College of Cardiology and 29 other vendors, DISC 95 or the Digital Interchange Standard for Cardiology was released to the public.
”We wrote the software,” he said. “It was right around 1994 when we had been working as consultants that we decided it might be a good idea to capitalize a company. We knew that the new CD recording products would be okay, but we found there was no good, fast way to play those images back. We decided that if we started a company and wrote clever software we could take a PC, running Windows NT as an operating system, and use that as a workstation, instead of building a box with special hardware in it, which was uniformly what everyone else was doing.”
Now, Petrocelli said, Heartlab has “developed a good brand name” for itself and is widely recognized in the top hospitals in the country including Temple University, Duke Children’s Hospital, and the Mayo Clinic in Minnesota.
”We very aggressively marketed to larger hospitals,” he said. “We didn’t start this company to build the low cost products, so we had to pursue the top 25 percent of centers. We hired veteran sales people from other companies and relied on their contacts.”
According to Petrocelli the strategy has proven effective.
”Most of the money is in the upper quarter,” he said. “These are the folks that can really afford to pursue excellence and they take the time to really research their products instead of going with what they know. Once you get one, two, or three centers, then it sort of mushrooms and it’s not such a risk for the smaller centers anymore. This in turn has made us the company to beat.”
Petrocelli credits some of the company’s success to its loyal employees, none of whom have left the company.
”We have excellent retention,” he said. “We have a very good dynamic, which is important because these are the people that keep the lights on for us.”
Originally located in Providence, Petrocelli said the decision to move the company to Westerly was based on the quality of life for employees and its proximity to the company’s closest markets in New Jersey and New York.
”I am originally from Westerly,” he said. “And we found that we could get more cost effective space here. We also found that we could attract more engineers, many of whom are from Boston.”
Still, Petrocelli said in order to continue competing in the market, the company has to constantly deliver new products. The latest product is a DVD (digital versatile disc) archiving system that provides nearly instantaneous access to thousands of diagnostic quality catheterization-labs. Petrocelli said the new technology has several important advantages, including data security, a 100-year archival life and very high performance.
”We need to continually reinvest,” he said. “We tend to turn out new software every one to two quarters, and the mission of the company is to provide one or two major innovations a year.”
Petrocelli said the company’s ability to stay at the cutting edge of the market has also resulted in consolidation among other companies.
”Toshiba Medicals, competed with us for a long time, and eventually gave up. Now the company sells our products with their cath-labs exclusively,” he said. “What we’ve done is sort of raise or lower the bar depending on what metaphor you want to use. We have made it harder for our competitors to have complacency. So we pushed them. I think that the greatest compliment we get is when other companies say they can do what we do.”
With a firm anchor in the area of cardiac image management, Petrocelli said there is a chance the company “will piggyback” onto other areas, but he said he doesn’t see the company growing to more than 100 people.
”Mission of the company is cardiac imaging management, and the reason we focused on the cath-lab is because they have the capital budget to support this type of activity initially,” he said. “Our goal would be through incremental expenses to expand. We have a very specific plan, most of which we can’t reveal, that will have us having a broader presence in cardiology than just the cath lab.”
