Discovery reduces staff as upgrade comes in late

May 8, 1991

Discovery Systems of Longmont, CO, laid off nine of its 22 employeeslast month as a result of delays in finalizing its upgraded FilmFaxteleradiology system. Administrative staff members and sales peoplewere among those let go. Sales representative are

Discovery Systems of Longmont, CO, laid off nine of its 22 employeeslast month as a result of delays in finalizing its upgraded FilmFaxteleradiology system. Administrative staff members and sales peoplewere among those let go. Sales representative are being offeredthe option to sell FilmFax as independent representatives, saidRalph J. Patitucci, president and CEO.

Discovery had planned to release its new system last monthbut now expects to complete development in July. In the meantime,the company continues to sell the original FilmFax, which sendsdigitized x-rays to a remote workstation. It is concentratingon conserving cash to sustain it through the second product launch,Patitucci said.

The firm has stanched a substantial cash hemorrhage and hopesto break even in fiscal 1992 (end-June). Discovery was spun offinto a separate public company by Denver-based Healthwatch lastyear (SCAN 3/14/90). Healthwatch has maintained a 57% ownershipof the firm.

Discovery anticipates it will have an easier time obtainingfinancing to continue through its start-up phase once break-evenis reached and the new product is released. The firm is lookingfor investors to supply working capital and fund inventory, Patituccisaid.

No cutbacks were made in the company's engineering team, hesaid. FilmFax is being completely reworked to provide direct,video frame-grabbing capture of computed tomography and magneticresonance images. The new FilmFax will also provide multiple phone-linetransmission, a multitasking computer architecture and 2000 x2000-pixel resolution on the receiving computer. A low-cost, portablecomputer that allows physicians to receive images while on callwill be added as well.

FilmFax was introduced at the 1989 Radiological Society ofNorth America meeting. It incorporated an original concept ofdigitizing film images and then sending those data to hard-copyoutput generated by laser printers. The hard-copy to hard-copystrategy was abandoned largely because of difficulties interfacingwith laser cameras, Patitucci said.

"It (connecting to lasers) could have been done if wecustomized every site, but this is a product, not a science project,"he said.

Discovery is implementing many features in the new FilmFaxproduct that were suggested by customers over the last year anda half. The computer architecture has been completely overhauledto improve upgradability, he said.

A third-generation FilmFax, which the firm hopes to have readyby the 1991 RSNA meeting in December, will add on a networkinginterface capability to the basic teleradiology product, Patituccisaid.