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Aethon’s TUG robot navigates its way to commercial success

Posted on September 11, 2012 at 9:00 am

This article is part of a series on robotics and entrepreneurship.

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Robots are the future. Robots are also the present. As I have written in my previous articles about robotics and entrepreneurship, robots are used today for practical applications solving real business problems. Aethon is one of the best examples.

Aethon was founded in 2001 by Henry Thorne, who moved on from Aethon to found another robotics-based, practical applications company, Thorley Industries and 4Moms, which NewVenturist will feature in an upcoming post.

Aethon (pronounced ā-thon) takes its name from one of the four horses of Greek mythology that pulls Helios’ chariot – the Sun – across the sky each day. Like the mythological horse, Aethon’s robots work consistently all day and every day to accomplish what needs to be done.

Aethon is just one of the companies featured on NewVenturist that has used robotics as a means to an end, rather than an end in and of itself. These companies are proving that robotics today is not a scary thing of the future but a mainstream trend of the present. Today, robotics can be the base for cost-effective, productivity enhancing, hardware and software solutions to real-world problems.

The problem.  Aethon’s, approach to the problem was different than the mainstream robotic community. The company believed that the solution had to be low cost. This is especially difficult to accomplish in robotics, which oftentimes results in effective, but costly, solutions. Working with a team of robotic engineers and healthcare experts, Aethon used a combination of sensor modalities, monitoring software, planning algorithms, and mechanical designs that most thought wouldn’t work. But they do work. And Aethon’s business model is proof.

The problem Aethon sought to resolve is that hospital logistics is resource-poor and labor-intensive. Nurses push heavy carts. Hospitals have to employ couriers to deliver items like medicines and supplies from one end of the hospital to another. And, because of inherent inefficiencies, unorthodox practices have arisen, such as hoarding and secreting of supplies. It was and is an environment that is screaming for automation.

TUG robotTUG, the robot.  Aethon’s automated robotic delivery system, TUG, was developed to deliver and transport medications, supplies, meals, linen, and waste. “These are activities which can be performed efficiently by robots, leaving staff free to accomplish other, higher-value tasks, such as attend to patients,” Aethon’s CEO, Aldo Zini, tells me. TUG can handle scheduled or on-demand deliveries. The robot works 24/7, and never gets sidetracked or distracted from its delivery mission.

TUG performs the essential task of transporting carts, when they can’t, or shouldn’t, move on their own. Aethon’s TUG moves supplies from inventory to the bedside, improving efficiency to help keep costs under control. Aethon can cite numerous examples where deploying TUG has saved approximately 60% of the time it takes from drug order to delivery to a nursing unit.

TUG’s value proposition is clear and its deployment in over 150 hospitals is proof that customers see that value. While there are benefits to patients, hospital employees, and administrators, the key value of TUG is financial: after purchase of the robot, an average hospital can save up to almost two employee/courier salaries per year. In this day and age, when hospitals are under enormous pressure to increase the quality of care and reduce costs, TUG can be a godsend.

Aethon has also developed MedEx, an RFID-based tracking and security software system which gives hospitals the ability to monitor and electronically document the delivery process. MedEx tracks items from the loading dock to the point-of-use, the “chain of custody,” Aldo calls it. Coupled with TUG, MedEx provides hospitals with a complete solution for accountability, reporting, and transportation on an integrated platform. MedEx has received much attention from customers since its launch in 2011, and software sales have been steadily increasing.

Aldo ZiniGrowth.  Aldo joined Aethon with an investment and with the vision that mobile robots could provide a viable solution to hospital logistics. It took almost eight years and multiple iterations of the technology to develop an autonomous mobile robot that can navigate safely in hospitals. To date, Aethon has raised approximately $50 million from angels, venture capitalists and strategic investors.

It has not been easy. The path to commercializing any robotics technology is long and winding. Funding challenges are notorious. But Aethon has been able to do something that Aldo believes, “No one else in the world has done.” He continues:

“The question is, ‘How can you reliably and safely have a robot navigate the hospital?’ We are perhaps decades away from robots autonomously roaming throughout a complex environment with 99.99% accuracy without some human intervention. We got around that by developing a remote monitoring system. It’s the “behind the scenes” vision technology that makes our robots able to successfully navigate the hospital. We use sensor modalities and software algorithms that are very unique and allow the TUG to navigate very well. But it’s still a machine. People can place items in the hallway that blocks the TUG. We solve the problem through our remote monitoring system, or command center – when TUG encounters a problem, the robot calls us: ‘I am having a problem right now.’ We log onto the robot and diagnose the problem. We take control of TUG remotely if necessary and guide it, steer it, and move it to another elevator or around the obstacle. This was an incredibly challenging engineering problem to solve. It took the same amount of time to develop this concept as to develop the robot. Now, information from TUG is sent to us over the Internet and we can analyze it instantly. It’s like a real-time video game. We can see all of the TUGs all of the time. And that is a real competitive advantage and why our robots are very reliable.”

With over 400 robots in operation, Aethon has to be able to respond and solve a problem within seconds. Aldo is proud of the fact that,

“We fix the problem within a few seconds 99% of the time. Hospitals tell us in amazement that ‘TUG never breaks.’ Actually, like any machine, it does require attention, but we fix it so hospitals don’t notice any interruption in service.”

Without the command center, which Aethon staffs 24/7, the company might not be as successful. Aldo and his team know that TUG, or any robot, cannot work perfectly in an uncontrolled environment all the time. “It’s the nature of the beast,” Aldo calls it. Aethon has pioneered the idea of accepting that technology cannot be perfect but the service to the customer must be – 100% of the time.

About Aldo.  Aldo is not the roboticist behind the Aethon technology. An engineer out of University of Pittsburgh with a masters from Carnegie Mellon’s Heinz College, he was always focused on the business of the startup. His career had been in healthcare information technology consulting and development. He worked with fellow Pittsburgh entrepreneur, Sean McDonald, who, at Automated Healthcare, had commercialized the first pharmaceutical “picking” robot which was acquired by McKesson in 1996. Aldo describes how working for Automated set the stage for his leadership role in Aethon:

“Automated was a great experience in building a company from the ground up. We automated labor-intensive and error-prone processes in hospitals. We were the first to introduce barcoding to medications. And our robot picked the medications for each patient, as opposed to technicians doing that job. That was a novel idea. And the company did well; it was a solid company with a great team. I learned a lot.”

From Automated, Aldo migrated to another Pittsburgh startup, TechRx, a provider of pharmacy software which was acquired by NDCHealth in 2003. TechRx was a very quick success. In 15 months, the company had acquired five companies and became one of the largest automated pharmaceutical software providers in the country. Eventually, NDCHealth was acquired by McKesson in a roll-up strategy. Aldo stayed there two years and then was ready for another startup – Aethon.

Aethon Today.  Aethon achieved breakeven during 2011 and expects to be profitable in 2012. The company today employs about 75 people, 8 of them in marketing and sales. The company has a solid plan in place: “Sell more “fleet” robots for multiple hospital applications; sell the MedEx software system and expand its tracking technology to other applications; and make sure the resources are there to do it.”

TUG robots make about 50,000 deliveries per week, or more than one million per year. “Nobody else is doing that,” Aldo announces. Aethon has sales throughout the US and has started to break into Europe, partly as a result of its partnership with Bosch (which included a $5 million investment in 2010) which has opened doors in Germany and other European countries. The company is also making inroads into Australia, Denmark, and Japan.

Aethon is proof that robotics companies can raise money, develop commercially viable products, and gain market entry and growth based on cost-effective, automated solutions that change and improve processes. Bravo. Go Aethon!

This post is sponsored by Innovation Accelerator, the private side of a public-private partnership with the National Science Foundation to make America more competitive through innovation. This post is part of a series on robotics and entrepreneurship being published in New Venturist Summer, 2012.