Mindray and Masimo Announce License & Purchase Agreement

Irvine, California, December 19, 2002, Masimo, the innovator of motion and low perfusion-tolerant pulse oximetry technology, announced today that it has formed a strategic alliance with leading Chinese medical device manufacturer, Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (Mindray) of Shenzhen, China. Mindray, the largest domestic manufacturer of patient monitoring products in China, will incorporate Masimo SET^® motion and low perfusion tolerant pulse oximetry as its primary pulse oximetry technology for its patient monitoring products.

Minghe Cheng, Vice President and Director of Marketing for Mindray, indicated that the company has been the leader in the Chinese market for medium to low-priced monitors, but sees Masimo SET as an integral component for moving to the higher performance end of the market. "We are getting many requests from our customers for Masimo SET pulse oximetry and we feel we need to now move quickly to make it available," commented Cheng.

"We are happy to begin a long term relationship with Mindray, a company with high quality product offerings and a tremendous amount of respect as a leading patient monitoring company in the Chinese market," said Stan Lipin, President of Asia-Pacific Operations for Masimo Corporation. "This agreement is a key component of establishing Masimo SET as the preferred pulse oximetry technology in Asia."

About Mindray Corporation
Shenzhen Mindray Bio-Medical Electronics Co., Ltd, a sino-U.S. joint venture, located in Shenzhen, P. R. China, is engaged in the development, manufacturing, marketing and selling of electro-medical equipment in the Patient Monitoring, Laboratory Instrument and Medical Ultrasound fields. With annual sales growing at 40% in recent years, Mindray has positioned itself as one of the largest electro-medical equipment manufacturers in China since its establishment in 1991. Safety and reliability have enabled Mindray's products to be well accepted in more than 10,000 hospitals in China. Mindray obtained an ISO9001/EN46001 Quality Assurance certification in 1995 and a CE mark for its patient monitors in 2000, which establishes the company as a player in the global patient monitoring market. Mindray's products are currently sold in more than 50 countries world-wide. Additional information about Mindray and its products can be found on the company's web site: www.mindray.com.cn

Cook Children's Medical Center Converts to Masimo SET^® Pulse Oximetry

Medical Center selects device following clinical evaluation comparing "Next Generation" Oximetry

Irvine, California, December 11, 2002. Masimo, the innovator of Signal Extraction Pulse Oximetry, announced today that Cook Children's Medical Center has standardized on Masimo SET pulse oximetry. Their hospital-wide conversion follows an evaluation of Masimo SET was appropriate for the hospital's needs.

"The pulse oximetry evaluation at Cook Children's was extensive, and the clinicians ultimately concluded the performance of Masimo SET was most suitable for their needs," said Cook Children's representatives. They added, "Due to the design and durability of Masimo's LNOP sensors, we also determined there would be savings for the Medical Center by switching to Masimo SET pulse oximetry." 

"We are continually striving to make improvements in patient care for the children who come to Cook Children's Medical Center," stated Barbara Greer, Nursing Director of Neonatal Intensive Care Unit. "When we evaluated Masimo SET pulse oximetry, we saw an advantage with this technology. False alarms were reduced, while the ability to track SpO2 improved." 

Said Debra Yorek, Anesthesia Coordinator, "Masimo's clinical team was very helpful throughout the transition and our staff is satisfied with the performance of Masimo SET pulse oximetry."

"Cook Children's Medical Center is a nationally-recognized children's hospital," stated Kevin Mosher, President, Americas for Masimo Corporation. "Cook Children's undertook an extensive evaluation of Masimo SET versus other companies' 'next generation' pulse oximetry technologies, and we are delighted to see their conclusions are consistent with the large volume of clinical and laboratory studies that demonstrate the value of Masimo SET pulse oximetry."

CAS Medical Systems, Inc. and Masimo Announce Agreement to Incorporate Masimo SET into CAS Vital Signs Monitors

Irvine, CA, December 5, 2002 - CAS Medical Systems Inc. (CAMY), a full service medical device company, and Masimo Corporation, innovator of motion and low perfusion-tolerant pulse oximetry, today announced the signing of a purchasing and licensing agreement to incorporate Masimo Signal Extraction Technology^® into future CAS Medical Systems vital signs monitors with pulse oximetry functionality. CAS will integrate Masimo's MS-7 pulse oximetry module in its multi-parameter monitors, including the new Model 740 monitor that measures blood pressure, pulse oximetry and temperature, to enable Masimo SET^® performance. 

"CAS Medical was founded on the philosophy of providing innovative technologies to our customers and their patients while meeting the highest standards for product quality, service and performance," stated Louis P. Scheps, President and CEO of CAS Medical Systems, Inc. "We are pleased to partner with Masimo because they share this commitment to offering enhanced patient outcomes through advanced state-of-the-art medical technologies. The integration of Masimo SET into CAS monitors means we will be able to supply our customers with a truly significant advance in pulse oximetry technology to improve the quality of patient care."

"We are proud to have CAS Medical Systems as a partner. CAS chose to integrate Masimo SET because of the technology's unprecedented fidelity, sensitivity and specificity," stated Joe E. Kiani, Chairman and CEO of Masimo Corporation. "Over 50 independent clinical studies have shown that Masimo's proprietary technology gives superior performance compared with all other next generation and conventional technologies."

About CAS Medical Systems, Inc.
Founded in 1984, CAS Medical Systems, Inc. (Branford, CT), designs, manufactures and markets medical products with a specific emphasis in neonatal intensive care, blood pressure measurement equipment, and apnea monitoring equipment. The company's products are designed to improve the quality of patient care and to provide exceptional value and performance. With a reputation for the highest quality products available in the markets it serves, CAS' products are used by clinicians worldwide. Additional information about CAS Medical Systems and its products is available on the company's website: www.casmed.com.

Schiller & Masimo Expand Their Business Relationship

Schiller Selects Masimo SET^® as its Exclusive Pulse Oximetry Technology

Dusseldorf, Germany, November 21, 2002, Leading European medical device manufacturer and supplier of electrocardiographs, spirometers, MRI monitors, defibrillators and patient monitors, Schiller AG Corporation (Baar, Switzerland), and Masimo Corporation, innovator of motion and low perfusion-tolerant pulse oximetry technology, today announced an agreement whereby Schiller will make Masimo SET its exclusive pulse oximetry technology. 

"Alfred Schiller, Founder and Chief Executive Officer of Schiller stated, "Masimo and Schiller have enjoyed a successful business relationship for over five years. We realized in 1996, when we first met with Masimo, that Masimo SET pulse oximetry was likely to become the standard of care for monitoring patients at risk of hypoxemia. Today indeed Masimo SET has become the standard for pulse oximetry. Not only has Masimo's innovation changed how pulse oximeters are regarded, but clinicians consider Masimo as the safest and most reliable pulse oximeter; they ask for Masimo by name." 

"Schiller has been a leader in electrocardiography and a leader in improving the process of care in hospitals with innovative solutions, such as the PB1000. Schiller is a world-class organization with outstanding technology; we are delighted that after nearly six years of doing business together, Schiller is further committing to Masimo SET by making it their exclusive pulse oximetry technology," said Joe E. Kiani, CEO and Chairman of the Board of Masimo. "100% of the Healthcare providers throughout the world who have chosen Schiller's products for their quality and value, can now be assured they will also realize the benefits of Masimo SET pulse oximetry in the care of their patients." 

About Schiller Corporation
Founded in 1974 by Physicist Alfred E. Schiller, Schiller's leading-edge position in world markets is based on the mastery and combination of clearly defined core competencies, including Research and Development, Product Management, Sales and Technical Service and Quality. Schiller's rich product portfolio includes solutions for ECG/Ergometry, Cardiopulmonary, Patient Monitoring, Defibrillators, Telemedicine, Blood Pressure and Data Management and software. Schiller products are manufactured under stringent quality control conditions, meeting ISO 9001:2000 / EN 46001 and CE-0123 label certifications, as well as fulfilling the EU medical Products Directive 93/42/EEC, Annex II.3. Through continued improvement of its processes and quality, as well as the periodical inspection by the Notified Body TÜV, Schiller products fulfill all relevant safety and EMC requirements.

Broadlane and Masimo Announce Three-Year Agreement for Masimo Signal Extraction Pulse Oximetry

SAN FRANCISCO and IRVINE, CA - November 13, 2002 - Broadlane Inc., a leading provider of total cost management services to the healthcare industry, and Masimo Corporation, the innovator of Signal Extraction pulse oximetry, today announced an agreement to provide the Masimo Signal Extraction pulse oximetry technology (Masimo SET^®) to Broadlane's healthcare provider customers. The three-year agreement is effective Dec. 1, 2002.

The agreement addresses a wide variety of user needs through Masimo's extensive line of single patient adhesive and reusable sensors, including its newly released LNOP II series and reusable finger clip, ear and multi-site resposable sensors.

"Masimo's mission has been to improve patient care and reduce the cost of care by making patient monitoring reliable and taking it to new sites and applications," said Kevin Mosher, president, Masimo Americas. "Broadlane's customers include leading healthcare providers throughout the country, and we are delighted to be able to bring the value of Masimo SET pulse oximetry to their members." 

Masimo was awarded the contract as part of Broadlane's intensive contract selection process, which focuses on delivering high quality, cost effective products and services to Broadlane's healthcare provider customers. To ensure that it selects the best products and vendors for its customers, Broadlane solicits input and direction from key end users, such as physicians and nurses, as well as hospital business leaders. 

Suppliers find particular value in contracting with Broadlane because of the company's strategy of involving clinical end users from the beginning of the contracting process. That means that buyers ultimately have a much deeper commitment to the contracts than is typical. 

"Masimo products were requested by our customers and we worked with Masimo to ensure that our customer's needs were met," said Jim Webb, who heads the medical and surgical groups in Broadlane's Contracting Services Department. "Masimo is an excellent addition to our pulse oximetry contract portfolio."

About Broadlane
Broadlane delivers total cost management to the healthcare industry, allowing hospitals to reduce operational costs while maintaining or enhancing patient care and clinician satisfaction. Broadlane provides contracting, clinical, operational and technology services, as well as outsourcing. Among the companies that focus on cost management within the healthcare supply chain, only Broadlane offers this total cost management approach.

Broadlane customers include leading healthcare providers such as Kaiser Permanente, Tenet Healthcare Corporation, Universal Health Services, Continuum Health Partners, The Health Alliance of Greater Cincinnati, Kindred Healthcare, Community Health Systems, U.S. Oncology and others. Broadlane counts among its customers more than 490 acute care hospitals, more than 1,500 sub-acute care facilities and thousands of physician practices. Broadlane has offices in San Francisco and Oakland, Calif.; Cincinnati; Dallas; and New York City. For more information, visit www.broadlane.com.

New Study Demonstrates The Superior Performance of Masimo SET^® Oximetry

Study shows Masimo SET is superior at keeping infants in safe arterial oxygenation range

Irvine, California, November 7, 2002 - An original manuscript, "Detection of hyperoxemia in neonates: data from three new pulse oximeters", has been published in the November 2002 issue of Arch Dis Child Fetal Neonatal Ed (2002;87:F217-F219) by B Bohnhorst, MD and CS Peter, MD, Department of Neonatology and Pediatric Pulmonary, Hanover Medical School, Hanover, Germany, and Christian Poets, MD Department of Neonatology, University Hospital, Tubingen, Germany. The study's objective was to investigate the ability of new generation pulse oximeters to detect hyperoxemia (too much oxygen in the blood) by maintaining a high degree of sensitivity (ability to detect hyperoxemia) and an acceptable level of specificity (ability to not falsely indicate hyperoxemia), while monitoring neonates. Reliable detection of hyperoxemia in neonates is important in minimizing the risks of acute and chronic oxygen toxicity, such as Retinopathy of Prematurity (eye damage which can lead to blindness in premature infants). 

Fifty-six term and preterm infants were studied, and 291 blood gases were analyzed and compared to the corresponding SpO2 values for each of the Masimo SET (V1.13), Philps/Agilent Viridia M3 (software version B.0) and the Tyco-Nellcor N3000 Oxismart (software version 3.04) pulse oximeters. At 95% saturation, which the researchers believed was a safe arterial oxygen level for neonates, all three oximeters had a sensitivity between 93-95%, while the Masimo SET oximeter demonstrated a specificity that was 73% better than the Nellcor Oxismart, and 50% better than the Philips Viridia M3. 

Joe E. Kiani, Chief Executive Officer of Masimo stated, "Neonates to adults can suffer from brain damage or even die if they have too little oxygen in their blood. But neonates pose another challenge to clinicians, as too much oxygen can cause Retinopathy of Prematurity (ROP) resulting in eye damage or blindness. The Vermont Oxford Network has reported ROP rates as high as 10% with preterm babies less than 1,500 grams in the US. This rate has been dropping and many clinicians have attributed the improvement to better protocols and tools, including the use of Masimo SET pulse oximetry. This study, conducted by clinicians who are internationally respected in their field, confirms the superiority of Masimo SET pulse oximetry for monitoring neonates in the intensive care unit. Masimo SET has been evaluated in over 50 independent and objective clinical studies in the past 8 years and has been shown to dramatically decrease false alarms while increasing the ability to accurately detect true events, even under the most challenging patient conditions of motion and low perfusion on neonates, children and adults."

Study Published in Anesthesia & Analgesia Demonstrates The Superior Performance of Masimo SET^® Pulse Oximetry

Masimo SET Performance Rating Dramatically Exceeds All 20 Pulse Oximeters Tested, including Tyco-Nellcor N-395

Irvine, California, October 28, 2002 - An original manuscript, "'Motion Resistant' Pulse Oximetry: A Comparison of New and Old Models", has been published in the October 2002 Analgesia and Anesthesia (Anesth Analg 2002;95:967-72) by Steven J. Barker, PhD, MD, Department of Anesthesiology, University of Arizona, Tucson, Arizona. The study compared the performance of twenty new and older generation pulse oximeters on volunteers during combinations of motion and low perfusion. The study found the Masimo SET pulse oximeter exhibited the best overall performance with a performance index of 94%. The Tyco-Nellcor N-395 had a performance index of 69%.

Dr. Barker conducted the studies on 70 healthy volunteers using a motorized motion table that enabled consistent comparisons of both periodic and aperiodic (randomly varied frequencies) for various motions simulating clinical patient conditions. The volunteers were moving through rapid desaturations and resaturation in a low perfusion environment. Dr. Barker stated, "On the basis of observations in the recovery room and intensive care unit (ICU), we believe these motions are similar to movements of actual patients." For the purposes of the study, the performance index (PI) was a value representing the combination of sensitivity - the ability to detect true desaturation episodes - and the specificity - the ability to not false alarm.

Dr. Barker concluded, "In summary, our volunteer data provide strong evidence that newer-generation pulse oximeters exhibit improved performance during patient motion. In particular, the Masimo SET appears to provide superior performance during motion, with substantially higher values of PI, sensitivity, and specificity.the clinical implications of this performance improvement are significant." Dr. Barker continued, "Because awake, hypoxic patients tend to be agitated and moving, pulse oximeters are more likely to be affected by motion artifact when the patient is in distress. Motion-resistant, or read-through-motion oximeters, particularly the Masimo, will be more capable of displaying accurate SpO2 values in this setting, which will improve our ability to detect life-threatening hypoxemia."

Joe E. Kiani, Chief Executive Officer of Masimo stated, "What is so powerful about Dr. Barker's study is that his protocol is challenging and his results have correlated extremely well to how pulse oximeters perform in the real clinical environment¹. Many of the studies conducted by other researchers are typically not repeatable or meaningful due to inconsistencies in the motion protocols from subject to subject, or because the studies are based on extreme scenarios not seen in the actual clinical setting. Testing healthy subjects in a warm environment with intermittent motion, or subjecting them to extreme perfusion states not seen in the clinical setting, basically reveals that all systems (including the older Datex-Ohmeda 3700s and Nellcor N200s) either work, or that none of them work. All cars crash tested at 5 miles per hour do well, and all fail when crash tested at 150 miles per hour. What matters is how they perform at 40, 50 or 60 miles per hour. Dr. Barker's motion and low perfusion protocol is not only repeatable, but it tests the pulse oximeters at the level that matches the real clinical environment."

1. Torres A, Skender K, Wohrley J, Aldag J, Raff G, Geiss D, Assessment of 2 New Generation Pulse Oximeters During Low Perfusion in Children. Crit Care Med Vol. 29 No. 12 (Suppl.) A117 Dec 2001

Additional References:
Brouillette RT, Lavergne J, Leimanis A, Nixon GM, Laden S, McGregor CD. Differences in pulse oximetry technology can affect detection of sleep disorders in children. Anesthesia and Analgesia 2002; 94(S1): S47-53.
Bohnhorst B, Peter CS, Poets CF. Pulse oximeters' reliability in detecting hypoxemia and bradycardia: Comparison between a conventional and two new generation oximeters. Critical Care Medicine 2000; 28(5): 1565-1568.
Hay WW, Rodden DJ, Collins SM, Melara DL, Hale KA, Fashaw LM. Reliability of conventional and new pulse oximetry in neonatal patients, Journal of Perinatology, Vol.22, No. 5, July/August 2002.
Miyasaka K. Pulse oximetry in the management of children in the PICU. Anesthesia and Analgesia 2002; 94(S1): S44-46.
Shah N, Hoang TD Clack SL, Anderson CT. The impact of motion and low perfusion on the performance of Masimo SET pulse oximeter (PO) and four other POs for measurement of oxygen saturation (SpO2) and pulse rate (PR) in human volunteers. Anesthesiology 2001;95:A553.
Trang H, Leske V, Boureghda S, Gaultier C. Masimo SET pulse oximetry improves detection of sleep apnea- related hypoxemia. American Journal of Respiratory and Critical Care Medicine 2001;163(5):A298.
Lichtenthal P, Barker SJ. An Evaluation of Pulse Oximetry - Pre, during and Post CardioPulmonary Bypass. Abstract Presented at the 2002 American Society of Anesthesiologists, October 2002.

New Studies Demonstrate Masimo SET^®'s Superior Clinical Performance Compared to the Latest Pulse Oximeters From Tyco-Nellcor

American Association of Anesthesiology Refresher Course on Oxygen Monitoring Reveals Limitations of Forehead Reflectance Sensors

Orlando, FL, October 18, 2002 - Five studies were presented this week at the annual American Society of Anesthesiology (ASA) conference, which reported the superior clinical performance of Masimo SET pulse oximetry compared to the Tyco-Nellcor N-395 and N-595. Additionally, Dr. Steven J. Barker reported on the limitations of Nellcor's Max-Fast reflectance sensor. 

Peter Lichtenthal, M.D. and Steve Barker, M.D., Ph.D., from the University of Arizona Health Sciences Center, Tucson, AZ, compared the performance of the Masimo SET Radical^® to the Nellcor N-395 and N-200 pulse oximeters on both light and dark skin patients undergoing heart surgery with cardiopulmonary bypass (CPB). The results showed data dropouts during CPB for the Nellcor N-395 of 38% and 24% for dark and light skin patients, respectively, while the Masimo SET Radical dropped out just 7% and 2% for the same patients. The N-200 showed drop out rates of 43% and 42%. 

Dr. Barker also reported on the use of Nellcor's Max-Fast forehead reflectance sensor in his ASA Refresher Course, "Recent Developments in Oxygen Monitoring." Dr. Barker compared the performance of the Nellcor Oximax with Max-Fast forehead reflectance sensor to the Masimo SET Radical with Masimo LNOP Ear sensor in the Operating Room. On the very first patient, the Max-Fast forehead sensor reported oxygen saturations in the range of 30 - 60% for a period of several hours, while the Masimo LNOP Ear sensor showed SpO2 values in the low 90s. The Arterial Blood Gasses correlated closely with the Masimo readings throughout the period. These results were replicated in subsequent cases. Dr. Barker stated, "Forehead reflectance oximetry appears to have the same limitations today that I saw in my studies of about ten years ago. The signal-to-noise ratio is poor, resulting in frequent dropouts, and the presence of venous pulsations often causes low SpO2 readings." 

Toshiya Kawagishi, M.D., led a group of researchers from the Sapporo Medical University School of Medicine, Sapporo, Japan, in a study comparing the performance of pulse oximeters during blood pressure cuff-induced hypoperfusion in volunteers. Dr. Kawagishi compared the Masimo SET Radical to the Nellcor N-395 for time to loss of signal (TLS), time to recovery of signal (TR) and failure interval (FI). The Masimo SET Radical held the signal 2 ½ times longer than the Nellcor N-395 during cuff-induced low perfusion and the N-395's failure interval was also almost four times longer than the Masimo Radical. The authors concluded, "Our study clearly demonstrates that the Masimo SET Radical shows better performance than the Nellcor N-395, yielding a long-lasting and quick recovery in SpO2 during blood pressure measurement." 

Fredrick Robertson, M.D. and George Hoffman, M.D., from the Children's Hospital/Medical College of Wisconsin, Milwaukee, WI, reported the results of the hospital's study investigating the performance difference between the Masimo SET and the Nellcor N-395 pulse oximeters on their patients. The study revealed that a questionable signal occurred 13.9% of the time with the Nellcor N-395, as compared to just 1.2% of the time with the Masimo SET Radical. The authors concluded, "These differences between devices may be clinically significant for patients with low SpO2, such as those with cyanotic heart defects or severe lung disease."

Joe E. Kiani, Chief Executive Officer of Masimo, stated, "From our start, Masimo has focused on engineering breakthroughs that can be validated in the clinical setting, or by independent and objective clinical researchers who are thought leaders in their fields. While others may attempt to reinforce their marketing initiatives through internal and company funded studies, as appears to be happening again with the recent re-introduction of the forehead reflectance sensor, we have remained consistent to our objective of creating clinically significant advancements that can be independently validated." 

Kevin Mosher, President of Masimo Americas stated, "Whenever a new drug or device is introduced, the opinions represented in the clinical studies are usually divided into thirds. A third say the drug is superior, a third that it's inferior, and a third that it's equivalent. Of the 61 independent and objective publications that compared Masimo SET to other pulse oximetry technologies, 60 favored Masimo SET as superior. 21 of these studies compared Masimo to Nellcor's latest N-395/N-595 technology. The one neutral study simply demonstrated similar pulse rate performance when an intraaortic balloon pump was used."

New Studies Show Masimo SET^®'s Clinical Superiority Compared to the Latest Pulse Oximeters From Tyco-Nellcor

Women & Infants' and Queen of the Valley Medical Center Convert to Masimo SET

Tampa, FL, October 9, 2002 - Four studies were presented this week at the annual American Association of Respiratory Care (AARC) conference which reported the superior clinical performance of Masimo SET pulse oximetry compared to the Tyco-Nellcor N595 and N395, as well as improved caregiver satisfaction and patient safety post conversion to Masimo SET.

Robert Whitman, Ph.D., D,ABSM, RRT, RPFT, from the University of Kansas Medical Center, Kansas City, KS, compared the performance of the Masimo SET Radical^® and the Nellcor N-395pulse oximeters in their ability to assess the levels of desaturation during sleep related respiratory events in 35 patients. Dr. Whitman's group concluded, "The Masimo Radical oximeter detected 67% more desaturation episodes of greater than or equal to 4% [the new requirement for qualifying patients for treatment with CPAP under Medicare guidelines] than the Nellcor N-395 during standard polysomnography. In an additional investigation, Dr. Whitman and his group compared the new Nellcor MaxFast forehead sensor to the Masimo SET Radical in an evaluation of possible obstructive sleep disordered breathing on 10 patients. Dr. Whitman stated, "We were very interested in establishing the value of the MaxFast forehead reflectance sensor for use in our sleep patient population. We have used the previous Nellcor RS-10 sensor and were aware of the limitations due to venous congestion and pulsations, especially in supine patients. We were discouraged when we observed an erratic baseline in the majority of patients when compared to several finger sensors with readings of SPO2 lower by as much as 10 to 15% for extended periods of time. In addition, there was a dropout saturation rate greater than 4 times that observed with the finger sensors. This suggests that this probe technology continues to be plagued by the previously known limitations and is unsuitable for use in the sleep laboratory."

Mitchell Goldstein, MD, led a group of clinicians from Pediatrix Medical Group and Queen of the Valley Medical Center, West Covina, CA, in a study investigating the process and outcomes during an evaluation of two "next generation" pulse oximeters, the Masimo SET Radical and Nellcor-595/Oximax system. Masimo SET was judged to be superior in reliability and accuracy. The authors concluded, "Of the submitted written surveys, 75% exalted Masimo SET for its improved performance with motion, low perfusion, transport, sensor durability or day-to-day clinical use. . . 93% of respondents preferred the Masimo SET technology." The NICU, which had used Nellcor for the previous two decades, converted to Masimo SET following this extensive clinical evaluation. 

Kevin Lekites, RRT and Rebecca Jackvony, RRT, of Women and Infants' Hospital's NICU/Special Care Nursery in Providence, RI, analyzed staff satisfaction and patient safety over a 12 month period following conversion to Masimo SET pulse oximetry in the NICU. The group concluded, "After having used Masimo SET pulse oximetry in our NICU, our staff reports significant satisfaction and improved patient safety. They also perceive changes in their practice using this new technology, specifically in ease of management/titration of FiO2 levels." Mr. Lekites further stated, "Ease of sensor application, decreased false alarms, increased confidence in oximetry values, less handling of infants to 'fix or adjust' sensors and a greater sense of monitoring reliability are the benefits our clinicians espoused over the past year since switching to Masimo SET."

Muneyasu Sha, MD, et al, University Hospital Mizonokuti, Teikyo University, Kawasaki, Japan, focused on evaluating the effects of motion on two "next generation" pulse oximeters during volunteer studies. The study demonstrated that the Masimo SET Radical reported 32% fewer motion artifacts as compared to the Nellcor N-395. The study's authors concluded, "Masimo SET significantly reduced the number of motion related artifact; This result shows that Masimo SET may improve the reliability of desaturation detection in sleep apnea patients."

UCLA Healthcare, One of the Top 10 Hospitals in the Country, Converts to Masimo SET Pulse Oximetry

Irvine, California, September 30, 2002. Masimo, the innovator of Signal Extraction Pulse Oximetry, announced today that UCLA Healthcare has standardized on Masimo SET pulse oximetry at both their Westwood and Santa Monica facilities. This system-wide conversion comes after a more than yearlong evaluation of "next generation" pulse oximetry technologies.

"We are honored that UCLA Healthcare, one of the top ten hospitals in the country, selected Masimo SET technology for use throughout their hospital system," stated Kevin Mosher, President, Masimo Americas. "UCLA is recognized for their leadership within the medical community for setting standards of excellence and innovation in the delivery of health care, and their selection of Masimo SET pulse oximetry is a real testimonial to the performance of our technology. "

University Medical Center, Voted One of Top 100 Hospitals in America, Converts to Masimo SET^® Pulse Oximetry

Superior Clinical Performance, Ease of Use and Reduced Cost of Care Are Key Factors

Irvine, California, September 26, 2002. Masimo, the innovator of Signal Extraction Pulse Oximetry, announced the successful conversion of University Medical Center, Tucson AZ, to its Masimo SET technology. Key factors of this hospital-wide conversion were Masimo SET's superior clinical performance and reduced cost of care. The versatility of Masimo's Radical, which can be used as a handheld pulse oximeter or a bedside standalone pulse oximeter, also played a key role in the successful conversion. 

"I have used pulse oximetry since it was introduced in the early 1980's, but until Masimo SET came along, I have never really trusted the readings," said Cheryl Hamilton, Director of Respiratory Care Services. "Because of the reliability and accuracy of the technology, as well as the durability and pricing of the Masimo Sensors, we will save over $500,000 during the life of the contract." 

Vicky Hansen, Clinical Leader of the Emergency Department added, "The detachable aspect of the Masimo SET Radical Oximeter gives us great flexibility to accurately monitor patients throughout the ED, to X-Ray, the OR, or anywhere we need to go in the hospital."

University Medical Center also referenced the superior level of Masimo's customer support throughout the transition. "Masimo has been outstanding to work with throughout the installation of the Masimo equipment. They have sent support from the highest levels of the company and responded quickly to our concerns," stated Mike Anthis, Assistant Biomedical Engineer at the medical center.

"University Medical Center is acknowledged as one of the top 100 hospitals in the U.S.," stated Kevin Mosher, President, Americas of Masimo Corporation. "The National Benchmarks for Success 2000 study, which selected University Medical Center as one of the top 100 hospitals, recognizes those hospitals that demonstrate superior clinical, operational, and financial performance. UMC's record speaks for itself; they maintain the highest of standards, which speaks volumes about their choice of Masimo SET as their preferred pulse oximetry technology. We are honored by UMC's affirmation of Masimo SET and proud to be selected by an institution that represents the best in patient care."

Masimo Announces Second Generation Low Noise Optical Probe^® (LNOP^® II)

Neonatal Sensors Are the First Sensors to Employ LNOP II Improved SNR Technology

Irvine, Calif., Sept. 23, 2002. Masimo, the innovator of Signal Extraction Pulse Oximetry, today announced the launch of its second generation Low Noise Optical Probe Technology, LNOP II with improved signal to noise ratio (SNR). LNOP II is an evolution in low noise sensor technology, which was first pioneered by Masimo in 1996 with its introduction of LNOP Sensors. LNOP sensors are the first sensors designed for accuracy during motion and low perfusion, with many subtle and powerful design features that provide the improved motion and low perfusion performance. In addition, LNOP sensors are the first single patient adhesive pulse oximetry sensors designed to last throughout the patient's stay, making Masimo SET^® LNOP sensors the most reliable and cost effective sensor in the market. LNOP II improves upon all of the characteristics that have made Masimo SET LNOP sensors the gold standard for pulse oximetry. 

LNOP II sensors offer an improved signal-to-noise performance over Masimo's existing LNOP sensors, which to this point have offered the best signal-to-noise performance of any pulse oximetry sensor on the market. The first sensors to be offered with LNOP II technology will be infant and neonatal sensors, which will debut at the AARC Conference in Tampa, Florida, beginning October 5th. In addition to employing the improved LNOP II technology, these three neonatal sensors will expand Masimo's line of single patient adhesive pulse oximetry sensors. The new sensors, LNOP II Neo-L, LNOP II NeoPt-L and LNOP II Inf-L, have been designed in an "L" shape for easy application, while the current LNOP Neo "Y" sensors were designed for maximum flexibility. Combined, Masimo's line of pediatric/neonatal sensors offer the highest standard of care and broadest selection of any neonatal and pediatric single patient adhesive sensors available on the market. All of Masimo's popular sensors will soon be available with LNOP II technology. LNOP and LNOP II are fully backward and forward compatible with Masimo SET pulse oximeters, so no new investments are required in a Masimo SET user's pulse oximetry platform to gain the benefits offered by LNOP II. 

"Although in the late 1990s we redefined pulse oximetry by making it reliable even on the sickest and most challenging patients, we continue to improve our technology for the benefit of our customers," said Joe E. Kiani, Chairman and CEO of Masimo. "In 2000, we introduced Masimo SET V3, which not only exceeded the exceptional standards we had set for sensitivity and specificity, but also incorporated two new revolutionary features, Signal IQT and FastSatT. Similarly, our LNOP II sensors offer a noticeable improvement upon our LNOP series of sensors, which already deliver the industry-leading signal-to-noise performance. We will continue to work diligently to further improve oximetry." 

Canada's World-Renowned Hospital for Sick Children Standardizes on Masimo SET^® Pulse Oximetry

Proven Clinical Performance and Reduced Cost of Care are Cited as Key Factors

Irvine, California, September 19, 2002. Masimo Corporation, the innovator of Signal Extraction Pulse Oximetry, announced that the Hospital for Sick Children (Sick Kids), the largest pediatric academic health science center in Canada and one of the largest and most respected in the world, has chosen to standardize on Masimo SET pulse oximetry throughout the hospital. Sick Kids chose Masimo SET following an extensive effort by the hospital's patient monitoring task force, which established generic patient monitoring protocols, and evaluated technologies most suited to implementing these protocols.

Helen Edwards, manager of the Patient Monitoring Practices Project said, "Our protocols identified oxygen saturation monitoring as one of the most important parameters to measure for our patients at Sick Kids. A key factor in our decision was the proven clinical performance of Masimo SET, which will contribute to the quality and reduced cost of care."

"The Hospital for Sick Children is recognized and respected the world over for its excellence in patient care, education and clinical research," said Kevin Mosher, President, Masimo Americas. "Sick Kids is among the leaders in advancing standards of patient care, and we are honored by The Hospital for Sick Children's affirmation of Masimo SET and proud to be selected by an institution that represents the best in pediatric patient care."

About The Hospital for Sick Children 
The Hospital for Sick Children, affiliated with the University of Toronto, is the largest pediatric academic health science center in Canada and one of the largest in the world. Its mission is to provide the best in family-centered, compassionate care, to lead in scientific and clinical advancement, and to prepare the next generation of leaders in child health. For more information, please visit www.sickkids.ca.

Medtronic Physio-Control's Newest Cardiac Defibrillator/Monitor Incorporates Masimo Corporation Signal Extraction Technology For Pulse Oximetry

REDMOND, Wash., Sept. 16, 2002 - Medtronic Physio-Control annnounced its agreement with Masimo Corporation to incorporate Masimo's Signal Extraction Technology (Masimo SET^®) for pulse oximetry into its recently introduced LIFEPAK^® 20 defibrillator/monitor. Pulse oximetry continuously tracks pulse rate and oxygen saturation in the blood to determine trends and warn of dangerous saturation levels. The LIFEPAK 20 defibrillator/monitor offers both manual and AED (automated external defibrillator) functionality for hospital and clinic settings.

According to Jon Tremmel, president of Medtronic Physio-Control, the company chose Masimo's SET technology for the LIFEPAK 20 defibrillator/monitor because it provides accurate readings and fewer false alarms of dangerous saturation levels, particularly when patients are moving, or when there is little blood flow.

"Medtronic Physio-Control is a world-class supplier of lifesaving equipment for critically ill patients, and we're very honored that they have selected Masimo SET as its pulse oximetry technology for the LIFEPAK 20," stated Kevin Mosher, president of Masimo Americas. "Masimo SET pulse oximetry has been clinically proven superior under the most challenging patient conditions, for which Medtronic Physio-Control products are designed."

About Medtronic
Medtronic Physio-Control pioneered defibrillation technology nearly 50 years ago. Today, more than 350,000 LIFEPAK devices have been distributed worldwide, making the company the leading provider of defibrillation technology for saving the lives of people suffering sudden cardiac arrest. Four out of five emergency services use LIFEPAK defibrillators, and LIFEPAK defibrillator/monitors are used throughout the hospital from emergency rooms to intensive care, cardiac care and EP labs. For more information on LIFEPAK defibrillator/monitors, visit www.physiocontrol.com. Medtronic, Inc. (NYSE:MDT), headquartered in Minneapolis, is the world's leading medical technology company, providing lifelong solutions for people with chronic disease. Its Internet address is www.medtronic.com.

Any statements made about the company's anticipated financial results and regulatory approvals are forward-looking statements subject to risks and uncertainties such as those described in Medtronic's Annual Report on Form 10-K for the year ended April 26, 2002. Actual results may differ materially from anticipated results. 

Masimo Receives Frost & Sullivan's Product Quality Leadership Award

Irvine, California, September 12, 2002. Masimo today announced that it has received Frost & Sullivan's Product Quality Leadership Award for its Signal Extraction Pulse Oximetry Technology. This award, based on extensive independent analysis of companies in the healthcare industry, recognizes Masimo for its positive contribution to the U.S. Fetal and Neonatal markets. 

Frost & Sullivan utilized specific criteria to determine final competitor rankings, including product ability to fulfill customer needs in terms of functionality and user friendliness, lowest defect percentage, level of product support end-users receive from their suppliers and number of breakdowns or services required per year. According to Frost & Sullivan analyst, Elsa Costa, "The Masimo Signal Extraction Technology (Masimo SET) is a breakthrough technology to assess, process and register arterial oxygen saturation and pulse rate. Masimo SET enhances the accuracy of pulse oximetry (SpO2) monitoring, particularly in complex patient conditions such as motion and low peripheral perfusion. For its commitment to the highest standards of excellence in its product offerings, Frost & Sullivan is proud to present the 2002 Product Quality Leadership Award to Masimo Corporation." 

"It is gratifying to be recognized by Frost & Sullivan for the quality of our products and service," said Joe E. Kiani, Chief Executive Officer of Masimo. "Masimo SET pulse oximetry has forever raised the standard for which pulse oximeters will be measured by. Many clinicians and researchers have reported on Masimo SET's positive impact on the process of care by providing reliable oxygen saturation and pulse rate measurements under the most challenging patient conditions, such as motion and low perfusion - conditions when caregivers need to rely upon accurate monitoring the most. Making pulse oximetry a "foul weather" friend has been our passion. We also have an equal passion for establishing a new standard in product quality and customer support, and it is great to be recognized for our efforts and accomplishments by an independent market research organization as respected as Frost & Sullivan."

Masimo Corporation Awarded Contract by Premier for Masimo Signal Extraction Pulse Oximetry

Agreement provides more than 1500 hospitals and other healthcare sites access to Masimo SET^® Technology 

Irvine, California, September 3, 2002. Masimo, the innovator of motion and low perfusion tolerant pulse oximetry, today announced that Premier, one of the nation's leading group purchasing organizations (GPOs), has awarded a contract to Masimo under which Masimo will make available the Masimo Signal Extraction pulse oximetry technology (Masimo SET^®) to Premier's more than 1,500 affiliated hospital facilities. The three-year agreement is effective as of September 1, 2002.

Kevin Mosher, President of Masimo Americas stated, "Masimo offers Premier's member hospitals the most comprehensive clinical validation of safety and efficacy for any motion and low perfusion tolerant pulse oximetry technology as well as the broadest and deepest OEM offering of motion and low perfusion tolerant pulse oximetry on the market. In addition, this agreement offers Premier member hospitals the most extensive array of motion and low perfusion tolerant products and programs, such as guaranteed reductions in adhesive sensor utilization or capitated reusable sensor programs, depending upon the unique needs of each facility."

"Masimo's mission has been to improve patient care and reduce the cost of care by making patient monitoring reliable and taking it to new sites and applications," said Kevin Mosher, President of Masimo, Americas. "With our invention of Signal Extraction Technology, we solved the problem that plagued pulse oximetry, false alarms and missed events due to patient motion and low blood flow. Physicians around the world have sought out Masimo SET pulse oximetry due to its revolutionary performance. We are delighted to be able to now offer Premier member hospitals Masimo SET technology; this is a big step towards accomplishing our mission." 

"The healthcare marketplace is evolving so quickly and on so many levels such as features, innovations and pricing. Continuously improving our contract portfolio reflects our members' expectations that Premier continues to lead with new contracts and enhanced contracting strategies," said Howard Sanders, executive responsible for Premier's group purchasing services. "Multi-sourcing for products with high physician preference is consistent with Premier's contracting framework to help hospitals reduce overall costs while maintaining high standards in healthcare delivery."

Mr. Mosher added, "Today's hospitals are forced to deal with staffing shortages and pressures to reduce costs and medical errors. Masimo SET pulse oximetry offers clinicians a monitor that has been proven to work exceedingly well in a variety of medically challenging circumstances. This level of reliability has been shown to reduce the cost of care, and has been linked to reduced medical errors and improved patient care. We are anxious to offer our technology and a variety of flexible programs, whether the facility uses adhesive or reusable sensors, to Premier hospitals to help them meet their objective of improving their process of care."

Masimo Announces Promotion of Key Member of Masimo Europe

Promotion follows key hospital conversions to Masimo SET, including Assistance de Publique de Paris 

Irvine, California, August 29, 2002. Masimo Corporation, the innovator of Signal Extraction pulse oximetry, Masimo SET^®, today announced the promotion of Olivier Berthon to Senior Director, Masimo Europe. Mr. Berthon who is also Acting President for Masimo Europe takes on full responsibilities for all facets of Masimo business in Europe, Middle East and Africa. Mr. Berthon's promotion follows the rapid expansion of Masimo's European business, including the award of a tender for the prestigious Assistance de Publique de Paris, a 55-hospital network in France - which chose Masimo SET pulse oximetry as their standard pulse oximetry. 

Olivier Berthon, Sr. Director, Masimo Europe stated, "I am privileged to participate in Masimo's progress. Passion, focus and commitment to a superior technology and customer satisfaction are the keys to our success; and our European team is totally dedicated to this mission. We see positive reactions everyday to our technology on both OEM and Hospital sides, confirming that Masimo is all about improvement of patient care and customer satisfaction."

Joe E. Kiani, Chief Executive Officer of Masimo said, "It's gratifying to see our European operations prosper under Olivier's guidance. Olivier has been with us since we started our operations in Europe and has been the key driver in the rapid pace of Masimo SET adoption throughout France. Olivier's work at medical facilities like Assistance de Publique de Paris demonstrates his passion and commitment to the company and to the healthcare community at large. But more importantly, Olivier embodies the core values that have allowed Masimo to make the contributions that it has made to date. Those core values are all about getting business closer to the heart; where passion, commitment, truth, fascination, accomplishment and fun thrive." Mr. Kiani added, "We are looking for even greater success as Olivier leverages his talents with the strengths of the rest of the Masimo Team in Europe." 

Mr. Berthon graduated from Maîtrise de Science et Techniques biomédicales in 1989 and went on to attain his post-graduate degree in administration and marketing.

Masimo SET^® Contributes to Positive Change in Process of Care

Study Reports Significant Improvement in Accuracy, Reliability and Dramatic Reductions in Oxygen Therapy, Invasive Testing, and Latent Response Which Has Been Linked to Medical Error

IRVINE, Calif., August 27, 2002 - An original manuscript, "More reliable oximetry reduces the frequency of arterial blood gas analyses and hastens oxygen weaning after cardiac surgery: A prospective, randomized trial of the clinical impact of a new technology," has been published in the August 2002 Critical Care Medicine (Crit Care Med 2002 Vol. 30, No.8) by Charles G. Durbin, Jr., MD, FCCM, FAARC and Stephanie K. Rostow, RRT, Department of Anesthesiology, University of Virginia Health System, Charlottesville, Virginia. The researchers investigated the impact on clinical care and costs of Masimo SET pulse oximetry technology as compared with conventional pulse oximetry. The clinicians were blinded to which oximeter was being used. Dr. Durbin and Miss Rostow conducted the studies on 86 adult patients following coronary artery bypass grafts (CABG) surgery from August 1999 to September 2000. The researchers chose to study this patient population because it is "relatively homogenous, often hypothermic, subject to vigorous patient movement (shivering), and is routinely monitored with pulse oximetry." The study reported that caregivers weaned patients from high levels of oxygen therapy 49% faster, while administering 34% fewer arterial blood gas draws (ABGs), when monitoring with the Masimo SET pulse oximeter.

The researchers discussed, "With the advent of significantly improved oximetry technology leading to more reliable monitoring, we sought to evaluate the impact of this improvement on ICU care processes ... the Masimo SET oximetry technology was more reliable and accurate than our conventional pulse oximetry in patients after cardiac surgery. Its use also resulted in far less monitoring failure time than conventional oximetry, as this new technology has been shown to perform well in poor perfusion states and during motion ... Presenting more reliable oximetry data to clinicians resulted in more rapid and efficient weaning of the FI02, with fewer arterial blood gas measurements. This is all the more remarkable because clinicians were unaware of this arm of the study, and they had no independent knowledge of the improved reliability or accuracy of the [Masimo SET] device."

The study's authors concluded, "The potential impact on patient care and safety of improved monitor function are several. Monitors providing false alarms distract caregivers from other tasks and require attention to trouble shoot or fix the monitor. This decreases efficiency, increases costs, and increases the likelihood that monitoring will not be continued because of caregiver distrust of the device. Ultimately, patient safety may be adversely affected. This is particularly important because oximetry is being used outside the ICU on the general ward where the effects of false alarms are even more likely to negatively affect patient outcome ... Recent studies on human error and patient safety point to caregiver cognitive overload and distraction (termed latent conditions) as one cause of patient injury or error. The Masimo SET pulse oximeter used in this study reduces the number of untrustworthy alarms and indicators. This performance benefit existed regardless of blinding, implying the potential for improved monitor reliability in unattended, settings. These issues together have additional
important positive effects on caregivers and patient outcome."

Joe E. Kiani, Chief Executive Officer of Masimo stated, "Dr. Durbin and his research team won an award for this groundbreaking study when they first presented it in abstract form at the 2000 American Society of Anesthesiology Conference. Dr. Durbin's study is unique in that it not only looks at what Masimo SET has done to improve accuracy and reliability, but also at what clinicians can do when they have a monitor that really works; this is ultimately the test in efficacy of any tool, including pulse oximetry. Even though the clinicians in this study were blinded to the identity of the device they were seeing (conventional pulse oximeter vs. Masimo), the Masimo SET oximeter demonstrated a dramatic improvement in the process of care. We have witnessed instances of grave patient outcomes, including death, due to alarms being ignored or the device being disconnected from the patient due to false alarms. A recent example included a $43 Million judgment against a Southern California Hospital. As Dr. Durbin and his fellow researchers point out, Masimo SET should reduce these errors."

Masimo Corporation Announces MasimoU.com Website, The First On-Line Resource for Remote e-Learning and e-InservicingT for Pulse Oximeters

MasimoU.com is the result of collaboration between Masimo, Mass General Hospital and Saba

Irvine, California, August 21, 2002. Masimo Corporation, the innovator of Signal Extraction pulse oximetry, Masimo SET, today announced the launch of MasimoU.com (www.masimou.com), an industry-first website dedicated to clinical training on Masimo SET technology and pulse oximetry products. The first set of learning modules on MasimoU.com cover the historical aspects of pulse oximetry, LNOP^® single patient adhesive sensors and reusable sensors, and Masimo SET RadicalT. Future modules will include topics such as Physiology of Oxygen Transport, Limitations of Pulse Oximetry, and Signal Extraction Technology. MasimoU.com is a result of a two-year collaboration between Masimo, Mass General Hospital and Saba.

"Two major trends in our industry - the transition of hospitals to motion and low perfusion tolerant pulse oximetry, combined with the national nursing shortage - have been the impetus for MasimoU.com. MasimoU.com will provide a fast, efficient means of training an already overworked clinical community in the new standard of pulse oximetry," said Kevin Mosher, Masimo's President, Americas. "This is a great way to augment on-site training. Now, clinicians who may not have time for on-site training or are new within the hospital can receive an in-service at their convenience, 24 hours a day." 

MasimoU.com, powered by Saba Learning, is flexible and user friendly. The learning modules are presented in a user-interactive fashion that automatically keeps track of the progress of the learner and "bookmarks" documents so learners can easily monitor their progress and exit and return to the program at any time, resuming where they left off. Each learning module concludes with a test; results of which are available to the learner for self-improvement. Hospital compliance officers and department heads can also monitor test scores as well as the progress and time spent on the modules to ensure training compliance as part of an overall hospital quality program. 

Ellen Kinnealy, RN, Technology Specialist for Advanced Biosystem Group at Mass General Hospital stated, "having comprehensive, easy to use end user training information on line 24 by 7 is a valuable adjunct to in-person bedside patient care device training by clinical specialists." Ms. Kinnealy continued, "But what makes this tool invaluable is the ability to track the educational experience of the clinician and use the test results to focus on areas of need; this is spectacular. We can use these as a measure of competency. We can fulfill JCAHO's mandate to ensure competency of every user at bedside. Every nurse that comes in from any hospital can log in and get educated before they start. MasimoU is easy to use and navigate. The physiology of pulse oximetry is a wonderful refresher for any nurse, respiratory therapist or anesthesiologist to go through. This is what next generation is all about."

"The life sciences industry requires solutions designed to help achieve superior performance through the development and management of people," said Geno Tolari, Saba President and CEO. "We are excited to team with innovative organizations such as Masimo as they seek to meet the challenges of clinicians through best of breed learning solutions."

Kevin Mosher added, "The demands put upon today's health care providers require us to create new and innovative ways of improving not just the tools for delivery of health care, but also the tools for the delivery of information necessary to maximize health care as well. MasimoU.com is just one example of Masimo's recognition of the challenges facing clinicians within the hospital setting, and what can be done to address those challenges in a fun and innovative way." 

Saba (Nasdaq: SABA) is the leading provider of Human Capital Development and Management (HCDM) solutions. Saba offerings include an integrated Internet-based platform to manage learning, content, performance, talent, and collaboration; and related professional services. Organizations around the world rely on the Saba platform to ensure that their customers, partners, and employees have the knowledge and skills required to successfully execute business initiatives. For more information, please visit www.saba.com.

Premier Releases Business Practice Commitments in Response to Senate Antitrust Subcommittee Inquiry

Applauded by both the Senate Subcommittee and MDMA as a step in the right direction

Premier today released its own business practice commitments which it has delivered to the Senate Subcommittee on Antitrust in response to the Subcommittee's request at the April 30th hearing. These commitments are in addition to the Code of Conduct proposed by HIGPA last week.

Unlike the response received for the HIGPA document, both the Subcommittee leadership and the MDMA reacted very positively to Premier's proposal, while stating that additional details would need to be worked out to satisfy all concerns.

Premier's proposal and the statements from the Senate Subcommittee and MDMA can be viewed at http://www.masimo.com.

Masimo SET^® Significantly Outperforms "New Generation" Pulse Oximeters in the Monitoring of Sick Newborns

Clinical Study Sponsored by the National Institutes of Health (NIH) and Masimo

Irvine, California, July 23, 2002 - An original manuscript, "Reliability of Conventional and New Pulse Oximetry in Neonatal Patients", has been published in the July/August 2002 Journal of Perinatology (2002; 22:360-366) by William W. Hay, Jr. MD, et al, from the Neonatal Clinical Research Center, Department of Pediatrics, University of Colorado Health Sciences Center, Denver, Colorado. The researchers compared the performance of the Masimo SET pulse oximeter to a conventional pulse oximeter, the Nellcor N-200, and three "new-generation pulse oximeters", the Nellcor N-395 (which according to Tyco-Nellcor is equivalent to the N-595), the Respironics-Novametrix MARS, and the Philips Viridia 24C in the Neonatal Intensive Care Unit (NICU). 

"Compared with Nellcor, Masimo SET had 92% less total alarm time. Masimo SET also identified nearly all bradycardias versus 14% for the Nellcor," commented the researchers. The "New Generation" performance results reported by Dr. Hay's team are presented in the following table:

The researchers stated, "Pulse oximetry is used routinely in patients in the NICU to monitor blood oxygenation and PR (pulse rate). However, it has a high false-alarm rate that to date has been at best a nuisance to caregivers and parents and at worst has led to medical mismanagement. Such errors in management leading to over or under oxygenation could have detrimental effects for very preterm infants at risk for ROP (eye damage) in the first several days of life and both term and preterm infants at risk of pulmonary hypertension. Our results are consistent with other reports of increased accuracy during motion and marked reduction in false alarms using Masimo SET for monitoring adults and children. In addition, this study demonstrates increase in PR accuracy versus conventional pulse oximetry when comparing data for true and false bradycardic events. The bradycardic events missed by the Masimo SET pulse oximeter were 5 seconds or less in duration and probably are the result of differences in averaging modes between the ECG monitor and the pulse oximeter.This added finding of more accurate PR detection indicates that Masimo SET pulse oximetry may suffice where sophisticated ECG monitoring is not available, such as in home care or step-down units."

The authors further stated, "Routine use of Masimo SET pulse oximetry in the NICU could improve clinician confidence in this parameter leading to more accurate administration of oxygen with possible reductions in hypoxic (e.g., pulmonary hypertension) and hyperoxic (e.g., retinopathy of prematurity (ROP)) pathology. Additionally, a more trustworthy technology should equate with fewer confirmatory arterial blood gas analyses (less blood loss), and faster weaning from the mechanical ventilation (less chronic lung disease)."

Joe E. Kiani, Chief Executive Officer of Masimo stated, "Recently our competitors have cited laboratory and exercise studies, some conducted in their own corporate facilities by their own employees and consultants, as sources of proof for equivalency to Masimo SET. When viewed with a discerning eye, their own data actually shows Masimo SET to be superior (see www.masimo.com). However, this study performed in the clinical environment on real patients as well as over a dozen other independent and objective clinical studies comparing Masimo SET to other 'new generation' pulse oximeters conducted by leading clinical researchers, show that Masimo SET is not only significantly better in rigorous laboratory testing, but also where it counts the most, on patients in the clinic who need to be monitored reliably during motion, low perfusion and at times of need." 

Masimo Views Tyco-Nellcor Senate Response as Rhetoric

Masimo Challenges Tyco-Nellcor to a Public Evaluation

As you may have heard, the Senate Committee on the Judiciary--Subcommittee on Antitrust, Business Rights and Competition held a hearing on April 30, 2002, to discuss the role of Group Purchasing Organizations in the healthcare community. The hearing was entitled "Hospital Group Purchasing; Lowering Costs at the Expense of Patient Health and Medical Innovation?" Masimo's Chairman and CEO was one of the witnesses called to testify. For more information on the Hearing, see Senate Hearing in www.masimo.com.

Since the Hearing, Tyco-Nellcor has responded by flooding the market with letters, Fed-Ex's and e-mails that have severely distorted or simply ignored the facts and attempted to take focus off of their own impending problems. For those interested, please click on "Senate Hearing Update" on www.masimo.com for Masimo's factual responses to Tyco-Nellcor's rhetoric. 

The Bottom line is that Masimo is always open in participating in rigorous, objective and independent evaluations. We also invite all interested parties, including the media and GPO representatives, to observe the next such clinical side-by-side evaluation. For more information on how to witness such an evaluation or perform one in your own hospital, please contact Masimo and ask about the $250,000 No Bull Guarantee.

Masimo Corporation Announces Results of Technology Comparison Study Between Masimo SET^® and Nellcor N-595

Masimo Reasserts its $250,000 Guarantee that Masimo SET Pulse Oximetry Technology will Outperform Tyco-Nellcor N-595 in the Hospital

Irvine, California, June 25, 2002 - Masimo Corporation, the innovator of Signal Extraction pulse oximetry, announced today the completion of a technology comparison study between Masimo SET^® technology and Nellcor's Oxismart XL N-395 and OxiMax N-595. Three of these tests showed false desaturations and false pulse rate indications with the Nellcor N-595 as well as the N-395 pulse oximeters during motion, while Masimo SET tracked closely with the reference pulse oximeters on the non-motion hand. The fourth test demonstrated the response time of Masimo SET Radical with LNOP^® Ear sensor as compared to the Nellcor N-595 with Max-Fast Reflectance forehead sensor. The results demonstrated Masimo responded to the changing physiology faster than the Nellcor N-595. To view the four tests via streaming video, visit Masimo's website at http://www.masimo.com. 

From these tests, it was demonstrated that:

• Masimo SET performed significantly better than either the N-595 or N-395 devices. 
• The newer generation N-595 did not perform as well as the older generation N-395. 
• The N-595 implication of being 'faster' was not substantiated. 

Masimo also re-asserted a $250,000 (US) guarantee to hospitals, whose goal is to upgrade their pulse oximetry to the new motion and low perfusion tolerant performance standard, that Masimo SET will outperform the Nellcor N-595. Important details and conditions for the guarantee are available on our web page: http://www.masimo.com.

MDMA Announces Addition of Medical Technology Innovator to Board

Joe E. Kiani of Masimo Corporation Accepts Appointment and Agrees to Head the Group Purchasing Task Force

Washington, D.C., June 4, 2002 - Today the Medical Device Manufacturers Association (MDMA) announced that Joe E. Kiani, Chief Executive Officer of Masimo Corporation, has become the newest member of its Board of Directors. In addition, the MDMA has asked Mr. Kiani to head the Group Purchasing Task Force.

"We are happy to have Mr. Kiani join our Board," stated Paul Touhey, Chairman of the MDMA Board of Directors. "Joe has been involved in his own successful medical technology venture, Masimo Corporation, since its founding. He has had extensive experience in dealing with complex issues, from financing his company to working with the FDA and dealing with intellectual property issues. Mr. Kiani's relentless pursuit of his dream has recently made him the focal point of the group purchasing debate. For all these reasons, we feel that he is not only going to be a great contributor on the MDMA Board, but also the right individual to head up MDMA's GPO task force. We are pleased that Mr. Kiani senses his moral responsibility and has agreed to spearhead the efforts to free the market and bring competition back to our industry."

Mr. Kiani is the founder of Masimo Corporation and has served as its Chief Executive Officer and Chairman of the Board since Masimo's inception in 1989. Masimo Corporation is the innovator and leader of motion and low perfusion tolerant pulse oximetry. Mr. Kiani is an inventor on more than 30 patents related to signal processing, sensors, and patient monitoring. Mr. Kiani serves on the Board of SABA, a publicly traded company, Concentric Medical and the Orange County March of Dimes. In February 2000, Mr. Kiani became the first recipient of the Society of Critical Care Medicine Technology Excellence Award. He has also received the Excellence in Leadership award from The March of Dimes and The Huntington Disease Society of America Celebration of Hope Award. 

"I am honored to join the Board of the MDMA," stated Joe E. Kiani. "I am extremely impressed with the effectiveness and seriousness of the MDMA in making significant progress on issues which are crucial to the preservation and advancement of the medical technology industry. I am honored to be heading up MDMA's committee on this serious GPO issue. We are convinced that if certain GPOs serve the interest of their member hospitals, competition will be restored and America's health care would not only improve but would become more affordable. I urge all health care professionals, medical technology companies, medical product distributors, investors in the medical field and whoever believes in the cause of improving patient care and reducing cost of care to step up and help MDMA by either joining MDMA or simply making a donation to the MDMA's Committee for Restoring Competition and Choice."

The Medical Device Manufacturers Association (MDMA) is a national trade association based in Washington, D.C. that represents and serves the innovators and entrepreneurs in the medical device industry. Representing nearly 140 independent manufacturers of medical devices, diagnostic products, and health care information systems, MDMA seeks to improve the quality of patient care by encouraging the development of new medical technology and fostering the availability of innovative products in the marketplace. 

Masimo Files Suit Against Tyco for Violation of Antitrust Laws

Irvine, CA, May 23, 2002 - Masimo Corporation announced today that it has filed suit against Tyco Health Care Group, L.P. and Mallinckrodt, Inc. (collectively, Tyco), for damage to its business resulting from the anti-competitive business practices of Tyco in connection with its Nellcor pulse oximetry brand. The lawsuit alleges, among other things, that Tyco harmed Masimo through a series of illegal exclusionary and anti-competitive acts designed to maintain its monopoly in the market for pulse oximetry sensors and patient cables in the United States. Masimo has retained the law firm of Susman Godfrey L.L.P. on a contingent fee basis to seek recovery of damages and injunctive relief for the benefit of the company. Susman Godfrey is one of the nation's leading antitrust law firms, having been responsible for three of the five most significant antitrust settlements in US history.

Pulse oximetry products are used by hospitals to monitor the blood oxygen levels of critically ill patients. Annual sales of pulse oximetry products in the United States exceed $500 million. The lawsuit alleges that Tyco has shut Masimo out of more than 90% of the relevant markets through various means, including entry into exclusive dealing contracts with purchasers, and in particular, Group Purchasing Organizations (GPOs), which negotiate contracts on behalf of their member hospitals, and other anti-competitive conduct. The suit has been filed in United States District Court in Los Angeles. Click here to view a copy of the complaint.

About Susman Godfrey L.L.P

Susman Godfrey L.L.P. is a law firm that limits its practice to litigation on behalf of both plaintiffs and defendants. The firm has offices in Los Angeles, Houston, Dallas and Seattle. It has represented its clients in complex litigation matters, including landmark antitrust cases, in courts throughout the United States. Additional information about the firm is available at http://www.susmangodfrey.com.

Masimo Presents at Deutsche Bank Alex. Brown Health Care Conference

Masimo Reports Record Results for 2001 and Positive Cash Flow for the First Quarter of 2002

Baltimore, MD, May 7, 2002 - Masimo Corporation today presented at the 27th Annual Deutsche Bank Alex. Brown Health Care 2002 Conference held in Baltimore. Masimo, a privately-held medical technology company, is the innovator of breakthrough signal processing and sensor technology for patient monitoring and the technology leader of motion and low perfusion tolerant pulse oximetry. 

Joe E. Kiani, Chairman and CEO, reported that the Company continued to make significant progress in 2001 on all fronts. Mr. Kiani stated that the Company's revenues increased by approximately 55% to $22.1 million for 2001. He also noted that the worldwide installed base of monitors using Masimo SET pulse oximetery had grown to approximately 60,000 units by year-end. These units helped Masimo more than double its disposable sensor shipments for 2001.

Mr. Kiani reported that the strong growth trends continued in the first quarter of 2002, with revenues for the quarter reaching approximately $7.8 million, which was a 61% increase over the same quarter a year ago, excluding a one time purchase of installed units by a distributor. Mr. Kiani also reported the Company's march towards profitability and positive cash flow continued with cash ending positively by approximately $0.1 million in Q1 2002 as compared to negative cash flow of $6.1 million for Q1 2001.

"I am pleased with these results and the state of our business," stated Joe E. Kiani, Chairman and CEO of Masimo. "Our current momentum, our impressive list of customers and partners and our talented and dedicated Team make me very confident about the future of Masimo." 

Masimo SET^® Outperforms Tyco/Nellcor's New N-595 Oximeter in Early Clinical Evaluations

Masimo Stands Behind Performance Advantage with $250,000 Guarantee

Atlanta, Georgia, May 7, 2002 - Masimo Corporation, the innovator of Signal Extraction Pulse Oximetry, announced the launch of their "No Bull" campaign at the National Teaching Institute & Critical Care Exposition of the American Association of Critical Care Nurses annual convention. The campaign includes a guarantee by Masimo that their Masimo SET pulse oximetry technology will outperform the Tyco/Nellcor N-395 or N-595 pulse oximetry technologies in any objective side-by-side hospital evaluation. Please see Masimo's Web site www.masimo.com or consult with your Masimo Representative for details. 

Masimo's bold campaign comes on the heels of several early clinical evaluations comparing Masimo SET pulse oximetry with the latest Nellcor offering, the N-595 pulse oximeter. Evaluations were conducted on actual patients in two US hospitals and in one UK hospital. In all three cases, the performance advantage of Masimo SET over the Nellcor N-595 was significant and at least as great, if not greater, than it has been over the N-395. 

In addition to the Company's performance guarantee, Masimo is also guaranteeing a reduction in sensor consumption of at least 10% for any hospital switching to Masimo SET pulse oximetry, or Masimo will make up the difference. Masimo's sensor reduction guarantee follows several clinical studies now published which demonstrate that the durability and longevity of Masimo's LNOP^® adhesive sensors, as well as their adhesive rejuvenation feature, contribute to a significantly longer sensor life versus competitive products.

"There has been a lot of talk about new sensors, faster response times, and just about everything else but reliable pulse oximetry performance," stated Kevin Mosher, President, Masimo Americas. "It would appear that Nellcor is using the N-595 as a vehicle to usher in a new type of sensor that carries patent protection beyond next year, and perhaps also as an attempt to move the comparison target from the N-395 in the wake of so many clinical studies demonstrating the performance advantages of Masimo SET over that product. After seeing the performance of the N-595 in the field, we felt the resurrection of our No Bull campaign was a fitting response to all the noise being created, as well as a validation that Masimo will continue to confidently stand behind the superior performance of Masimo SET pulse oximetry against any other technology in the market."

"The launch of the N-595 has come with a lot of hype surrounding the response times of Nellcor's latest reflectance sensor," said Mike Petterson, Senior Director of Clinical Research for Masimo. "Nellcor has not changed the averaging times in the N-595, so any response time benefit coming from the MaxFast reflectance sensor would be purely physiological - any sensor put on the head will provide a faster response time with poorly perfused patients. In house comparisons have in fact shown that Masimo's LNOP Ear sensor operating on a Masimo SET oximeter in FastSatT mode actually provides faster response times than the Nellcor reflectance sensor. The real issue with reflectance sensors relates to why this decade-old technology has never taken off, namely the problems with venous pooling in the forehead, which corrupts the signal being delivered to the pulse oximeter. In the end, what you really want is an accurate SpO2 reading and past research has already shown that you don't get that with a forehead reflectance sensor." 

Masimo's No Bull campaign is offered through December 31, 2002. 

U.S. Senate Holds Hearings to Review GPO Practices

May 3, 2002 - As you may have heard, the Senate Committee on the Judiciary--Subcommittee on Antitrust, Business Rights and Competition held a hearing on Tuesday April 30 to discuss the role of Hospital Group Purchasing Organizations in the healthcare community. The hearing was entitled "Hospital Group Purchasing; Lowering Costs at the Expense of Patient Health and Medical Innovation?" 

The video of the hearing can be viewed and a verbatim written transcript can be accessed by 
clicking the above links. 

For the hearing, a statement for the record was given by the United States General Accounting Office in a report entitled "Group Purchasing Organizations - Pilot Study Suggests Large Buying Groups Do Not Always Offer Hospitals Lower Prices". Click here to view this report.

Prior to the hearing, written testimonies were given by the following witnesses: Mr. Richard A. Norling, Chief Executive Officer of Premier; Mr. Mark McKenna, President of Novation; Ms. Trisha Barrett, Value Analysis Facilitator at UCSF Medical Center; Mr. Joe E. Kiani, Chief Executive Officer of Masimo Corporation; Dr. Mitchell Goldstein, Neonatologist from Citrus Valley Medical Center; Mr. Lynn R. Detlor from GPO Concepts, Inc; and Ms. Elizabeth A. Weatherman, Managing Director of Warburg Pincus, LLC, representing The National Venture Capital Association (NVCA).

The written statement submitted by each witness can be found by clicking on the person's name above.

The statements on the hearing by Senator Herb Kolh, Chairman of the Antitrust Subcommittee and ranking member Senator Mike DeWine can be viewed at: Senator Kolh's Statement, Senator DeWine's Statement respectively.

Chairman Kohl and Ranking Member, Senator Mike DeWine also sent a formal request to the Federal Trade Commission and the Department of Justice to investigate the business practices of the GPOs. This written request can be viewed by clicking here.

MSP Industry Alert Highlights Key Healthcare Issues

Current Edition Addresses Sweeping Changes in The Pulse Oximetry Market 

April 17, 2002 - The latest edition of MSP Industry Alert features in depth coverage of several very hot topics that are the subject of debate, discussion and, in some cases, controversy. For your interest and convenience, we have summarized a few of the key points below. The full edition can be viewed through the following link: http://www.medsp.com/^MedSp/Newsletters/v4n1.pdf 

"Oximetry- Divergent Paths Ahead - Choose Carefully!"

Summary: This article deals with the rapidly evolving pulse oximetry market and especially the latest moves by Nellcor-Tyco. This article is a must for any healthcare institution planning to purchase new pulse oximeters as it discusses the long-term implications on sensor costs and compatibility in light of the upcoming expiration of Nellcor's sensor patents, as well as the clinical viability of different physiological sensor sites, such as the forehead.

Leading Hospital in Japan Upgrades to Masimo SET

The National Center For Child Health and Development (NCCHD) of Tokyo, Japan 
Standardizes on Masimo SET^® Pulse Oximetry

Tokyo, Japan, April 2, 2002 - The National Center for Child Health and Development (NCCHD), the leading pediatric medical center in Japan, held its official opening for a new 500 bed advanced medical facility (National Children's Medical Center) on March 1, 2002. NCCHD, the first Japanese national medical center to open in the 21st century, replaces the prestigious National Children's Hospital. NCCHD is staffed with world-renowned physicians, including Dr. Katsuyuki Miyasaka, Director, Department of Anesthesia and ICU, who chose Masimo SET as the pulse oximetry technology to standardize upon throughout the institution. 

Dr. Katsuyuki Miyasaka and his colleague, Dr. Yasuyuki Suzuki, Director of the Intensive Care Unit, have conducted extensive research in the field of pulse oximetry, particularly in the areas of false alarm reduction and the improvement of caregiver behaviors based upon accurate and reliable patient monitoring. The results of their research, which have been both peer-reviewed and published, was a key factor that led to their adoption of Masimo SET pulse oximetry as the technological standard for the new facility.

Also key to adoption of Masimo SET was the clinical staff's strong endorsement of the Masimo SET RadicalT, following more than a yearlong evaluation of "next generation" pulse oximeters. NCCHD's clinical staff made particular mention of not only the unparalleled sensitivity and specificity, but also Radical's SatShareT capability. SatShare is used with NCCHD's existing Philips multiparamater monitors. SatShare is Masimo's solution to hospitals and clinicians who wish to provide Masimo SET level of pulse oximetry throughout the entire hospital, without replacing the entire multiparameter patient monitors.

Katsuyuki Miyasaka, MD, FAAP, stated; "Pulse oximetry is by far the most frequently used monitor, but its readings could not be trusted entirely and its alarms were frequently ignored. We had become used to it and had been a slave to it for the past 20 years. We began a campaign in 1979 called "Sound of Silence" in our hospital with the aim to decrease distractions such as false alarms with the goal of improving vigilance for the sake of patient safety. The pulse oximeter was the major obstacle for this campaign, but not any more with Masimo SET."

"The NCCHD's adoption of Masimo SET represents a major milestone in the development of Masimo Japan," stated Stan Lipin, President of Masimo Japan KK. "We expect that NCCHD's hospital-wide conversion to Masimo SET will influence many other hospitals throughout Japan. Our clinical team has done a superb job with the successful installation of Masimo Radicals at the facility, and continues to be accessible to the NCCHD staff around the clock. We believe we have set an excellent model for further similar conversions."

Joe E. Kiani, CEO and Chairman of the Board of Masimo, stated; "we are proud of our association with NCCHD and grateful to Dr. Miyasaka, Dr. Suzuki and their colleagues for assisting us with Masimo SET V3."

NCCHD is operated by the Japanese Ministry of Health, Welfare, and Labor, and provides 500 beds for inpatients and support for over 900 outpatients per day. Included in NCCHD's 500 beds are 40 NICU beds, 20 ICU beds, 11 operating rooms and 5 recovery beds. NCCHD also functions as a medical policy making center in Japan, and networks extensively with 30 other pediatric medical centers throughout the country. NCCHD is considered a leading center in Japan for pediatric cardiac surgery.

Masimo Japan Opens Office in Tokyo

Industry and Pacific Rim Veteran Appointed as President, Asia-Pacific

Tokyo, Japan, March 26, 2002, Masimo Corporation, the innovator of Signal Extraction Pulse Oximetry, announced the establishment of Masimo Japan KK, and the opening of its new offices in Tokyo, Japan. Masimo Japan KK was established to better support and service the growing demand for Masimo SET pulse oximetry throughout the Pacific Rim. Masimo appointed Stan Lipin, an industry veteran with over 27 years experience in the medical industry, as President of Masimo Japan KK. 

Japan represents the second largest country market for Masimo SET technology after the United States. In 1997, Masimo established its first OEM partner relationship with NEC Medical Systems now part of GE Medical Systems, and to date, several major Japanese medical equipment manufacturers have adopted Masimo SET as their primary pulse oximetry technology. Japan is also home to several thought-leading physicians who have conducted extensive clinical research, which have shown Masimo SET pulse oximetry to be superior in terms of both performance and reliability. Today, the demand for Masimo SET pulse oximetry is growing rapidly throughout Japan, and it is quickly becoming the technology standard within the country's major medical centers.

Stan Lipin joined Masimo Corporation in July 2001as President of Asia Pacific Operations, and, with the establishment of Japan KK, continues to lead the expansion of Masimo's presence within the Asian-Pacific region. Mr. Lipin has over 27 years of experience in international marketing and sales for medical device companies, including having served as President and founder of Nellcor CMI, a joint venture between Nellcor and Century Medical Inc, where he took that business from the ground to over $60 million per year.

Mr. Lipin appointed Hiro Hamasaki as Masimo Japan KK's National Sales Manager in February 2002. Mr. Hamasaki has worked for KTS, a leading Japanese medical device distributor in the Tokyo region, since 1978. In that capacity, he has led a team of as many as 16 sales representatives in successfully selling a variety of medical devices, including Hewlett Packard patient monitoring systems. Mr. Hamasaki is well recognized in Japan as an authority in the industry, having published papers on the subject of patient monitoring in Japanese hospitals, and acted as a key industry organizer for the Japan Society of Clinical Monitoring.

Joe E. Kiani, Chairman & CEO of Masimo Corp. stated, "We're very pleased to have an individual with the passion and caliber of Stan Lipin heading up our operations in Asia Pacific and Mr. Hamasaki, heading up our operations in Japan. As a result of adoption of Masimo SET pulse oximetry as the new standard for monitoring patients at risk of hypoxemia, we are fortunate to be expanding our business in a number of regions around the globe. Stan has assembled a solid team in Tokyo. I am confident under his leadership, we will effectively manage our interests, while delivering first-rate customer service in Japan and the rest of Asia-Pacific."

Twenty Three studies were presented on Masimo SET^® at the International Symposium on Innovation and Applications of Pulse Oximetry

Studies Show Improved Patient Safety, Increased Caregiver Efficiency and Reduced Cost of Care 

Lubeck, Germany, March 14, 2002 - Twenty-three studies were presented at the International Symposium on Innovations and Applications of Pulse Oximetry (ISIAPO 2002), University of Lubeck, Lubeck, Germany. These studies have been published in January 2002 Supplement to Anesthesia & Analgesia. The studies spanned a variety of clinical care settings and patient populations, including the neonatal intensive care unit (NICU), the pediatric intensive care unit (PICU), the intensive care unit (ICU) and the sleep laboratory. The majority of the clinical studies further showed that Masimo SET pulse oximetry changed caregiver delivery patterns resulting in improved patient outcomes, and lowered costs of patient care, due to improved accuracy and dramatic reductions in false alarms. 

Michael Urschitz, MD and Christian Poets, MD, from Hannover Medical School, Germany presented a study titled: Use of Pulse Oximetry in Automated Oxygen Delivery to Infants. In this study they showed that Masimo SET correctly detected 217 of 223 true hypoxemia episodes for a sensitivity of 97%. The researchers reported that four of the six hypoxemias were missed due to the sensor being off the patient's skin. But all 6 were associated with the Masimo Low Signal IQ message. Signal IQT was further investigated and found to have excellent specificity (75%) and sensitivity (100%). Signal IQ is Masimo's unique signal identification and quality indicator, that helps clinicians identify readings of questionable validity due to extremely challenging motion and low perfusion conditions. The researchers concluded that, "With the sensitivity and specificity of Masimo SET pulse oximetry measurement as well as Signal IQ, oxygen delivery to premature and/or critically ill infants may be optimized and perhaps automated."

E. Wischniewski, MD, T. Erler, MD and S. Avenarius, MD from Children Hospital of Carl Thiem Klinikum in Cottbus and Otto von Guerick University Hospital in Magdeburg, Germany reported on their Multicenter Trial of Neonatal Pulse Oximeter Sensor Usage Study. Their multicenter study showed a two-fold increase in sensor life with the Masimo LNOP Neo sensor as compared with the Nellcor N25 sensor when used in conjunction with Masimo SET Radical and Nellcor N395/N3000 pulse oximeters, respectively. The authors stated, "This difference was consistent between various caregivers in multiple settings and corroborates the experience of another, more limited study. A cost savings should result from use of Masimo versus Nellcor pulse oximeter sensors in neonatal care." 

Charles Durbin, MD and Stephanie Rostow, RRT, from the University of Virginia Health Systems in the U.S.A., presented a study of 13 critically ill patients in the thoracic and cardiovascular ICU in whom conventional pulse oximetry failed to acquire and maintain reliable pulse oximetry signals. In 12 of the 13 patients, the Masimo SET pulse oximeter was able to obtain pulse oximetry readings that were confirmed accurate through invasive arterial blood gas measurements. In the only patient where no arterial oxygen saturation measurement was obtained with Masimo SET, no arterial blood could be obtained due to complete cardiac collapse and cardiac arrest, from which the patient expired. The study demonstrated that conventional pulse oximeter failures included erroneous readings both above and below the patients true arterial oxygen saturation - in some cases as much as 16% below and as high as 12% above the true oxygenation of the patients - which could lead clinicians to provide treatment where it is not necessary, or falsely assume the patient is well when in fact the patient is not. Dr. Durbin concluded, "Monitors providing no data or false alarms distract caregivers from other tasks and require attention to troubleshoot or fix the monitor. This decreases caregiver efficiency, increases costs, as well as it increases the likelihood that the monitor will be removed due to caregiver distrust of the device. Ultimately, patient safety is affected." Dr. Durbin and Ms. Rostow also presented two abstracts that demonstrated "significant reductions" in weaning time (68% faster) and fewer confirmatory arterial blood gases (33% fewer) when caregivers used the Masimo SET oximeter as compared with the conventional pulse oximeter. 

Katsuyuki Miyasaka, MD, Department of Anesthesia and ICU, National Children's Hospital, Tokyo, Japan, reported the results from a study pertaining to the reduction of pulse oximeter false alarms in the operating room and PICU under the hospital's "Sounds of Silence" campaign - a campaign aimed to decrease distractions such as false alarms with the goal of improving vigilance for the sake of patient safety. The study demonstrated that the Masimo SET V3.0 pulse oximeter delivered a 97% reduction in false alarms as compared with the conventional pulse oximeters previously used at the hospital. 

Robert Brouillette, MD, led a team of researchers from the Department Pediatrics, Montreal Children's Hospital, McGill University, Canada, in presenting the results of a study comparing new generation pulse oximetry technology in the detection of sleep-disordered breathing in children. The study showed that the Masimo SET pulse oximeter captured 98.6% of the true hypoxemia (desaturation) events, while the Tyco-Nellcor N-395 captured just 45.3% of the same events. Dr. Brouillette concluded, "The sensitivity and motion artifact rejection characteristics of the Nellcor N-395 oximeter are not adequate for a pediatric sleep laboratory setting, use of a Masimo oximeter with very short averaging time could significantly reduce workload and improve reliability of desaturation detection."

Steven Barker, MD, Professor and Head, Department of Anesthesiology, University of Arizona College of Medicine, in the U.S.A., presented the results of a study comparing all major brands of current generation pulse oximeters during reduced perfusion and mechanically controlled motion (both periodic and random) on 70 volunteers breathing room air and hypoxic mixtures. The Masimo SET pulse oximeter outperformed all other pulse oximeters, showing a sensitivity (the ability to detect true alarms) of 98% and a specificity (the ability to not generate a false alarm) of 93%. The Nellcor N-395 showed a sensitivity of 66% and a specificity of 78%.

Joe E. Kiani, Chairman & CEO of Masimo Corp. stated, "We are happy to see this gathering of so many of the world's leading researchers in pulse oximetry. Dr. Barker, Dr. Gehring and Dr. Konecny should be commended for their efforts in organizing this educational platform for researchers and clinicians pursuing the perfection of pulse oximetry. Motion and low perfusion tolerant pulse oximetry is now the standard of care. The changes in caregiver behavior are particularly satisfying as we continue to see more and more studies referring to the ability of Masimo SET to improve caregiver efficiency and behavior, which directly contributes to the reduction of medical errors and costs. But without Dr. Aoyagi's wonderful invention, we would have not been able to make the next leap. We salute Dr. Aoyagi." 

2 Powerful Groups Hold Sway Over Buying at Many Hospitals (New York Times)

The New York Times today published an article on two group purchasing organizations (GPOs), Premier and Novation, and the true impact they are having on patient care and costs. The practices reported by the Times, which seem hard to believe at first, are consistent with what we have observed while trying to get Masimo SET pulse oximetry into Premier and Novation hospitals. We have attached the full article text below and a link to the Times web page. For the complete article with graphics, pick up a copy of the March 4 New York Times.

We would like to hear your feedback.

New York Times
March 4, 2002 

2 Powerful Groups Hold Sway Over Buying at Many Hospitals 
By Walt Bogdanich

This article was reported by Walt Bogdanich, Barry Meier and Mary Williams Walsh and was written by Mr. Bogdanich. 

Amid a tangle of wires and worried faces, the brief life of Joshua Diaz was slipping away, and Dr. Mitchell R. Goldstein knew he must soon make an agonizing decision. 

For 30 minutes, Dr. Goldstein's emergency team had medically assaulted the 2-week-old baby with lifesaving measures, none of which appeared to be working. Worse, a device called a pulse oximeter failed to detect a pulse or show how much oxygen Joshua's blood was ferrying to his vital organs. 

"I had the nurse and respiratory therapists asking me, `Why are we doing this?' " said Dr. Goldstein, of West Covina, Calif. Some feared they were just torturing the baby. But the doctor pressed ahead after attaching a second, experimental monitor that showed encouraging signs: Joshua's blood was taking on more oxygen. 

Today, Joshua Diaz is a healthy 7-year-old living in Ontario, Calif. "We probably would have given up," Dr. Goldstein said, were it not for the second monitor. 

But seven years later, its inventor, Joe E. Kiani, says he still cannot sell his oximeter, regardless of the price, to many American hospitals, even though medical experts say it helps the most fragile of patients - premature infants. 

The reason, Mr. Kiani says, is that he has effectively been locked out - his much larger competitor has secured exclusive contracts to sell its device to thousands of hospitals, in part by paying fees to two national purchasing groups that largely determine which products many hospitals buy. 

These two private groups act as middlemen for about half the nation's nonprofit hospitals, negotiating contracts last year for some $34 billion in supplies, from pharmaceuticals to pacemakers, bandages to beds. 

Each group has the same basic mission: to use the market power of its more than 1,500 hospitals to find the best medical products at the lowest prices. 

But many in the medical world - Mr. Kiani among them - question whether that mission is being compromised by financial ties that the groups, Premier and Novation, have to medical supply companies, ties that, according to an investigation by The New York Times, are both extensive and highly unusual. 

The problem begins with this simple fact: The buying groups are financed not by the hospitals that buy products but by the companies that sell them. In other words, the groups take money from the very companies they are supposed to evaluate objectively. Each year, companies pay Premier and Novation hundreds of millions of dollars in fees that represent a percentage of hospital purchases. The more hospitals spend on medical supplies, the more dollars Premier and Novation get from the suppliers. 

In a few cases, Premier or some of its officials have also received stock or options from companies with which Premier contracts. 

Critics say such conflicts of interest can mean that the buying groups do not always choose the products that are best for patients, hospitals or the taxpayers and insurers that pay their bills. 

"It's just like payola," said Paul Lombardi, head of contracts for the Swedish Medical Center in Seattle. Buying groups are "getting paid" to buy certain products, said Mr. Lombardi, whose hospital system dropped Premier in 1996. 

In Mr. Kiani's case, his small company says it could not compete against an industry giant, Mallinckrodt, whose many products generate large fees for the buying groups. Nor, Mr. Kiani says, can he afford to do what that company did - help finance Premier's private venture-capital fund and contribute $1 million to a Premier research service. 

Premier did not give Mr. Kiani's company a contract even though the buying group's own evaluators had privately concluded in 1999 that its oximeter was superior to what was then on contract. Premier says that review was not conclusive. 

R. David Nelson, who leads the Institute for Supply Management, representing purchasing managers or buyers from 11,000 companies, said he was surprised to learn that buying groups were financed by suppliers. 

"I had no idea that the kind of things you're talking about were going on," Mr. Nelson said. If such practices occurred in the industries he knows, "red flags would go up all over the place," he added. 

When suppliers finance buying groups "you get the tail wagging the dog," Mr. Nelson said. 

Premier and Novation, which say their contracting decisions are untainted by supplier payments, release no public accounting of how much each supplier pays them, or the terms of individual contracts. 

"Billions of dollars are being controlled by two companies, and nobody knows who they are," said Larry R. Holden, president of the Medical Device Manufacturers Association, a Washington-based group of mostly small companies. "Nobody looks at their books. Nobody knows what companies they are investing in." 

The big buying groups "are like a form of government," said Peter Vincer of the Technology Management Group, an equipment maintenance company in Oak Creek, Wis. "They say who can play and what it costs to play." 

An Industry Is Transformed 

Buying groups became popular more than two decades ago as a way for hospitals to seek better prices for goods and services, which account for about a quarter of their costs. The groups identify good products and negotiate contracts for them, but member hospitals do the actual buying. 

Initially, there were no dominant buying groups, and hospitals, not suppliers, often financed them. Much has changed, however. Not only did the groups consolidate, but in 1986 they also convinced Congress that money could be saved if legislators allowed suppliers to pay their costs. 

As a result, Congress exempted the groups from federal antikickback laws. The agency now called the Centers for Medicare and Medicaid Services was supposed to monitor the fee payments "for possible abuse, particularly those in excess of 3 percent" of sales, according to a Congressional committee report. 

Novation and Premier may have gone well beyond what legislators envisioned. 

Novation acknowledges that about 30 percent of its contracts exceed 3 percent of sales, and a hospital official who buys through that group complains that some fees are now "up in the teens." Novation said its hospitals approved those fees. 

Premier accepts virtually no fees above 3 percent, but it has sometimes accepted stock in supplier companies in lieu of or in addition to cash payments. It has also invested in a number of companies in the medical supply field. 

Just three months ago, American Pharmaceutical Partners, based in Los Angeles - a company that Premier helped start and steered hospital business to - went public. At that time, the buying group's stake was worth $46 million. Premier said it invested in suppliers to encourage competition, to promote new technology and to make money for its hospital shareholders. 

Some of Novation's hospitals are angry that tens of millions of dollars of supplier fees were invested in a publicly traded, money-losing electronic commerce company, Neoforma Inc.

Several hospital officials contend that Premier and Novation have become preoccupied with increasing revenue, rather than negotiating the best deals on products. Instead of being returned to hospitals, some of that revenue goes to finance programs that have little to do with negotiating buying contracts. 

Some top buying group executives have found other ways to profit personally. Richard A. Norling, Premier's chairman and chief executive, was allowed to retain and continue collecting a supplier's stock options that he converted into a $4 million profit in 2001. 

Mr. Norling received those options while serving as a director of one of Premier's predecessor buying groups and as Premier's top official. 

Mr. Norling said he recused himself from any buying group decisions involving the company, Express Scripts, that gave him the options as one of its directors. 

Premier officials say they did not know until an inquiry by The Times that another of its executives, William J. Nydam, received stock options as a director of a Premier contractor, American Pharmaceutical Partners. The options were worth about $1.2 million when the company went public late last year. Mr. Nydam has since left Premier. 

Nor did the buying group know - until The Times asked - that another official, Palmer Ford, had received options from the same contractor after he left Premier, the group said. Neither man agreed to be interviewed. 

Not every company has opened its doors to Premier. Michael Dalton, the head of Norfolk Medical of Skokie, Ill., said an executive of his small medical device company told him that around 1996 he was approached by a Premier official who suggested that Norfolk could "move to the head of the line" in the contracting process if it allowed the buying group to invest. Premier said it knew of no such comment. 

Mr. Dalton said he had rejected the suggestion, but another company in the same field did give Premier securities. In 1998 that company, Horizon Medical Products of Manchester, Ga., issued Premier a warrant for up to 500,000 shares of its stock "in partial compensation" for Premier's business, records show. A top Premier contracting executive also got stock options as a member of Horizon's board. 

Premier and Novation say they use member hospitals to help them select products based on quality and cost, and not on other financial considerations. "We use a competitive bid process," said Novation's president, Mark McKenna. Novation said that in 1998 it began de-emphasizing the role of fees in awarding contracts. 

Mr. Norling, Premier's chief executive, said his members "would not use our services" if they thought fees and stock, rather than cost and quality, determined who got contracts. 

Supplier fees finance not just the cost of negotiating contracts, but also other programs, including ones to improve medical care. 

Some of the unused money goes back to the hospitals that own the buying groups in annual disbursements, though some members complain that not enough is returned. Other hospitals that buy through the groups but do not have an ownership stake get no cash back. 

Praise From Some Hospitals 

Maurice W. Elliott, a former chief executive of Methodist Healthcare in Memphis, said Premier saved his organization money, provided a "database to encourage quality" and helped him find minority contractors. 

Novation is also highly praised by many of the hospitals that use it. 

The two major buying groups say they are accountable only to those hospitals that own them. 

At Premier, which is based in San Diego, the owners include more than 200 hospital systems, among them prominent New York institutions like Mount Sinai Hospital and North Shore-Long Island Jewish. 

Novation, based in Irving, Tex., negotiates contracts on behalf of its two owners - VHA Inc., a group of mostly community hospitals, and the much smaller University HealthSystem Consortium, representing many academic hospitals. Supplier fees go to VHA and the consortium, which use them to finance various programs. 

"We answer the membership on every given day," Mr. McKenna of Novation said. 

But the answers do not satisfy everyone. Larry Dickson oversees purchasing through Novation for Providence Health System in Seattle. He says he cannot get specific information on fees, despite the critical role he plays in supplying his hospitals. 

"Why is this so secret?" Mr. Dickson asked. "There is an accountability question that is very much concerning a lot of people in health care. And if you ask, and the response you get is, `That's none of your business,' that raises more questions than it answers." 

An Inventor's Frustration 

Joe E. Kiani, an Iranian immigrant, was a 24-year-old electrical engineer in 1989 when he helped found a company called Masimo in a garage in Mission Viejo, Calif. Using $175,000 in loans and a second mortgage, he set out to solve a problem that had long eluded the makers of pulse oximeters: how to eliminate false readings caused by sudden patient movement. 

A pulse oximeter, which is clipped to a finger or toe, measures blood oxygen levels. It works best when patients are lying still, as during surgery. But the jerky movement of an infant or trauma patient can skew the readings. Nor did monitors work well in newborns, who have low blood flow in their hands and feet. 

When readings fall outside normal limits, either because of a sudden patient movement or a true emergency, an alarm sounds. With a false alarm, nurses may unwittingly give babies too much oxygen, heightening the risk of eye damage in premature infants, experts say. 

Moreover, when there are too many false alarms, as is often the case in neonatal units, hospital workers may become immune to the real ones. In such cases, brain damage can occur. 

By the mid-1990's, Mr. Kiani was convinced his new oximeter had solved those critical problems. And over time, many in the medical field would agree with him. Several hospitals that compared Masimo's device to conventional oximeters concluded that Masimo's was better. 

"If it was my baby or my daughter's baby, absolutely I would have Masimo on it," said Joseph Nigl, a respiratory therapist at Covenant Health Care in Saginaw, Mich. 

The Cedars-Sinai Medical Center in Los Angeles found Masimo's device played a critical role in helping to virtually eliminate certain infant eye damage, said Dr. Augusto Sola, formerly head of the neonatology unit. 

Even Masimo's chief competitor, Nellcor, said that the device was "very good" and that it had "raised the performance bar," according to what Masimo said were internal Nellcor documents filed as part of a patent dispute. Nellcor, a unit of Mallinckrodt, said those statements were taken out of context. 

Nellcor's device is highly regarded, but some clinicians said it was ripe for a challenge in the late 1990's. 

Dr. Goldstein, who saved Joshua Diaz, says Masimo's product was a significant advance. Masimo paid the cost of his traveling to present his research. 

For all the benefits of Mr. Kiani's oximeter, many hospitals would not buy it. And some would not even allow his sales staff to demonstrate how it worked. A reason: Masimo did not have a contract with Premier or Novation. Both had awarded "sole source" contracts to Nellcor, which meant that hospitals were given strong financial incentives to buy Nellcor oximeters. 

Mr. Kiani said he had not known that manufacturers were expected to supply the money that finances the big hospital buying groups. "I didn't think this kind of system existed," he said. 

It was a system that the big buying groups had creatively nurtured. Premier, for example, invited suppliers to attend a 2000 conference with this written offer: for $25,000, a company could buy not only advertising at the conference, but also a "private dinner" with two Premier vice presidents, and a "small group meeting" with hospitals. Premier has said money does not help any company get a contract. 

One invitation went to Retractable Technologies, a small maker of safety syringes in Little Elm, Tex. The company's chief executive, Thomas J. Shaw, says the dinner offer sounded to him like a bribe. "The initial $25,000 is just for the appetizer," Mr. Shaw said. "The entree is in the millions." 

Retractable has sued Premier and Novation in Texas, accusing them of restraining trade - a charge both groups deny. 

The entree Mr. Shaw referred to is what suppliers pay to sell their products through the big buying groups. The payments take different forms. Some include stock or options in the supplier, or have clauses where the fee percentage rises in proportion to sales. And buying groups often collect twice on the same product - from the manufacturer and from the company that delivers the product to hospitals. 

Suppliers have also sweetened contracts by agreeing to pay some fees before sales are made. The inspector general of the Centers for Medicare and Medicaid Services issued a legal advisory in 2000 stating that payments of that type could pose "a significant risk of fraud and abuse." 

Both groups say they have stopped taking such payments, and they declined to identify the companies that made them, or the size of the payments. 

Mr. Kiani's company had limited ability to pay fees because, like other small firms, it had a single product line. Nellcor had no such problem, because its corporate parent, Mallinckrodt, sold many other medical products through the buying group. 

Nor did Mr. Kiani know, when Masimo approached Premier in 1998, that Mallinckrodt had paid $1 million to belong to Premier's Innovation Institute. That unit promised to find ways to get new technology into hospitals. 

Mallinckrodt was also one of 12 limited partners investing millions in Premier's venture capital fund, the Premier Medical Partner Fund. Some of the limited partners had Premier contracts. 

Premier says suppliers got no special favors by financing either the institute or the fund. But, several small manufacturers say, the money solidified an already close relationship that big suppliers had with Premier. 

Unaware of these arrangements, Masimo officials had a favorable first impression of Premier. "We walked out of there thinking we had made it," one of them said. 

Device Gets Good Reviews 

Indeed, Premier's technical staff had high praise for Mr. Kiani's technology, called Masimo SET. 

That staff's 1999 report reads like a Masimo sales brochure: "Clinical trials conducted and published by well-respected physicians in the U.S. indicate that Masimo SET has significant clinical advantages to neonates and some highly critical adult patients." 

The report added, "We can conservatively say Masimo technology will remain superior" to Nellcor through the remainder of 1999. 

Masimo says it never saw the internal report. Instead, Premier told the company that more study was needed, then took nearly two years before finally rejecting Mr. Kiani's oximeter. 

By then, Nellcor had come out with its own improved model.

"They basically stonewalled us," Mr. Kiani said. Premier said the long delay was due to staff turnover and Masimo's slow response to information requests. 

Shown a copy of Premier's confidential report praising his product, Mr. Kiani said he believed that not only is he a victim, "but they are lying to their members and the hospitals they are representing." 

Premier officials said they based their rejection of Masimo's device on a survey of member hospitals. Most of the medical personnel surveyed were unfamiliar with Masimo but were pleased with the Nellcor device. 

Still, of the 20 that were familiar with Masimo's product, 15 said it was "more accurate than other pulse oximetry devices or eliminates false alarms," Premier's records show. 

Premier said that its survey and its conclusions were fair, and that it also took into account what few scientific research papers existed on the topic. 

Novation said it awarded a contract to Nellcor, rather than Masimo, for financial and clinical reasons. 

Both groups say hospitals can buy products from anyone, but there are financial penalties for buying too many supplies from outside the group, like lost discounts or less money back at the end of the year from their buying group. 

What happened to Masimo, Mr. Kiani says, underscores why more innovative medical devices are not getting into hospitals. "I doubt a company like Masimo could ever get funded now," he said. 

Mr. Norling of Premier disputes that. "We do not know of any company with a truly innovative and market-ready product that does not have a contract with Premier, if the company wants one," he said. Premier now runs a program it says has helped smaller companies with new technology get contracts. 

As for Mallinckrodt, its new corporate parent, Tyco International, said Nellcor had won contracts for one reason: its oximeter was superior. "Nellcor competes vigorously, fairly and ethically to earn and retain the business of Premier" and other buying groups, John H. Masterson, a Tyco lawyer, said in a statement. Neither Mallinckrodt nor Nellcor agreed to interviews. 

But Dr. Sola, the doctor who said Masimo helped reduce eye damage in infants, says the battle he had to fight just to get the device in his hospital caused him to question the whole group buying process. 

"In a country with freedom of choice, this was the hardest thing for me to understand," said Dr. Sola, who is from Argentina. "If the baby was choosing consciously, we know what the baby would choose." 

A Big Company Loses Out 

Questions about the fairness of Premier's selection process have also been raised by other companies, and not all of them small. 

St. Jude Medical, a large manufacturer of pacemakers, wanted a Premier contract, but two principal competitors - Medtronic and Guidant - already had it. Premier required St. Jude to demonstrate that its pacemaker had medical advantages the other brands did not; in Premier's words, that meant showing "breakthrough" technology. 

To help evaluate St. Jude's claims, Premier formed an expert panel of six cardiologists, including Dr. Anne Curtis at the University of Florida. 

Dr. Curtis said St. Jude claimed it could operate a pacemaker on less electricity, meaning the implanted battery would last longer. "When the battery runs down the patient has to come in for replacement surgery," Dr. Curtis said. 

On Sept. 19, 2000, the panel concluded: "In light of the increased device longevity and ease of use, the expert panel agreed unanimously that St. Jude's breakthrough claim is substantiated." 

But that is not what Premier reported to its contracting committee. Instead, it said the experts had found only a "theoretical breakthrough potential," and never mentioned the unanimous expert conclusion. 

"Why did we bother?" said Dr. Curtis after being shown a copy of how Premier represented her panel's findings. "Was it just going through the motions to say you had an expert panel so then you can do what you want?" 

Another panel member, who requested anonymity, said, "This is not an honest process." 

Last March, Premier's contracting committee rejected St. Jude's request after concluding that the product's battery did not last appreciably longer than others. 

Asked how it represented the experts' report, Premier said it did so "accurately." 

But St. Jude does not agree. "Premier's conduct makes no sense from the perspective of offering the best patient care at a fair price," said Peter Gove, a company spokesman. "We can only speculate as to whether ulterior motives could be driving Premier's behavior." 

Some Hospitals Seek Alternatives 

For all the criticism, Premier and Novation enjoy much support among the nation's hospitals. One reason is the annual checks, some totaling hundreds of thousands of dollars, that are their share of what manufacturers pay the buying groups. 

"A lot of health care folks at the end of the year say, `Geez, we're in the hole! Oh, wait a minute, we've got this money coming back,' " said Mr. Dickson of Providence Health. 

Hospitals have also slashed their purchasing staffs, leaving them with little expertise to oversee their buying groups or to find better deals on their own. 

"Waste and inefficiency in health care is every bit as bad as everyone says it is," said Trevor Fetter, the chairman and chief executive of Broadlane, a smaller buying group. 

No one knows how much money the buying groups save hospitals. Eugene S. Schneller, a professor at Arizona State University who has studied the issue, said the groups do provide benefits, although some hospitals can get good deals on their own. 

Some hospitals are now questioning the wisdom of staying in the big buying groups. 

Premier returned about 22 percent of its revenue last year to member hospitals. VHA returned 20 percent last year and Novation's other affiliated group, University HealthSystem Consortium, typically returns about 40 percent. The rest went for overhead, salaries, investments, and various programs. 

"No, we are not satisfied with the amounts we are receiving," said Dennis A. Hall, the chief executive of the Baptist Health System in Birmingham, Ala., which buys through Novation. 

Consorta, a smaller buying group, says it returns about 68 percent of its revenue. 

While smaller buying groups also accept fees, they say they operate differently. John Strong, Consorta's chief executive, said his group does not invest in suppliers because that "may affect the willingness of organizations to rigorously evaluate all competitors and all product options." Consorta limits fees to 3 percent. 

Mark Moyer, vice president for marketing for Amerinet, another smaller buying group, said his executives cannot sit on supplier boards. "We aren't going to line any pockets here," Mr. Moyer said. 

Premier suffered a major blow last summer when Trinity Health of Novi, Mich., whose chief executive, Judith C. Pelham, had been on Premier's board, decided to stop using the buying group. 

"We wanted to reduce the cost of our supplies," said Stephen Shivinsky, a Trinity spokesman. "As a Catholic nonprofit, we believe we have a responsibility to be good stewards of our resources." 

Nicholas C. Toscano, who oversees purchasing for Virtua Health in New Jersey, says his hospitals do their own buying, and save money. "There are no administrative fees in the contract," he said. And that means cheaper prices, he added. 

"We just gave our nurses some significant increases in salaries," he said. "We're expanding our emergency rooms. We're improving our operating rooms." 

Senator Patrick J. Leahy, Democrat of Vermont, said hospitals, not suppliers, should pay for buying groups. "The hospitals are going to be even more attentive to how they're performing," he said. "Because, after all, they're paying for it." 

Later articles will examine who benefits from the decisions of hospital buying groups.

http://www.nytimes.com/2002/03/04/business/04BUY.html?ex=1016265307&ei=1&en=3e55194a676ad49a

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Masimo Expands Manufacturing Capacity to Mexicali, Mexico

Expansion Needed to Meet Growing Demand for Masimo SET Products

Irvine, California, February 12, 2002 - Masimo Corporation, the innovator of Signal Extraction Pulse OximetryT, announced today the expansion of its manufacturing capacity in Mexicali, Mexico with a shelter labor agreement with Industrial Vallera de Mexicali, S.A. de C.V (IVEMSA). The 20,000 square foot manufacturing facility is currently being used to manufacturer Masimo's Low Noise Optical Probe (LNOP^®) line of Single Patient Adhesive, and reusable sensors, patient cables and other accessories. The Mexican facility serves to meet the growing demand for Masimo Signal Extraction Pulse Oximetry products, which continues to expand at a rapid pace, and to lower the company's cost of manufacturing. 

Gary Waite, Vice President of Manufacturing for Masimo, stated, "Month-over-month orders for our products have continued to increase at a phenomenal rate, so expansion of our manufacturing capability was a must. Although we continue to manufacture products in our 30,000 square foot facility in Irvine, with the high costs of manufacturing in Orange County, Mexico was a natural place to grow our manufacturing base. The people in Mexicali are hard working and capable. The plant is a state-of-the-art operation, and the quality of product coming out of the Mexican facility is exceptional."

Kevin Mosher, President, Masimo Americas Operations stated, "Masimo has grown by over 2000%, with an average compounded growth rate of 122% since 1998, which marked the international commercial launch of Masimo SET^® pulse oximetry. With sensor sales more than doubling year after year, the demand on our manufacturing team to keep up with this level of customer demand has been tremendous. We are happy to see our Mexicali operation in full swing, ready to meet the growing demand for our breakthrough products." 

New Clinical Study Shows Masimo SET^® The Choice For Monitoring Under Challenging Conditions

Failures were 76% lower with Masimo SET as compared with Tyco/Nellcor N-395 pulse oximeter

San Diego, California, January 29, 2002 - Adalberto Torres, MD, led a team of researchers from the University of Illinois College of Medicine and Children's Hospital of Illinois, Peoria, IL, in conducting a clinical study evaluating the effectiveness of two new generation pulse oximeters during low perfusion in children. The study, presented this week at the 31st Critical Care Congress of The Society of Critical Care Medicine in San Diego, California, found that SpO2 failures were 76% lower with the Masimo SET pulse oximeter as compared with the Nellcor N-395 pulse oximeter. 

Twenty-five children (median age five months) undergoing cardiopulmonary bypass (CPB) to repair congenital heart defects were studied. A total of sixty-one simultaneously obtained SaO2 (CO-Oximetry-measured oxygen saturations) and SpO2 (pulse oximeter measured oxygen saturations) were recorded in the operating room (OR) post CPB. SpO2 failures occurred 25 times of the 61 events recorded with the Nellcor N-395 pulse oximeter, but just 6 of the 61 events with the Masimo SET pulse oximeter. 

Kevin Mosher, President, Masimo Americas stated, "We are very pleased to see the results of yet another study that validates the superior performance of Masimo SET pulse oximetry. This study was particularly noteworthy, as it was not only performed in a clinical setting, but under extremely challenging conditions, once again validating the results of the motion and low perfusion studies done by Dr. Steven J. Barker, Chairman of Anesthesiology Department of the University of Arizona. The clinical value of pulse oximetry monitoring increases exponentially as patient acuity rises, and the mounting body of evidence clearly demonstrates that the performance gap between Masimo SET and other, "new generation" pulse oximeters, widens dramatically as patient conditions become more challenging." 

Masimo Introduces Three New Products at the Annual Congress of The Society of Critical Care Medicine

Masimo's LNOP Ear Sensor Offers Faster Response Times With None of the Drawbacks of Traditional Ear or Reflectance Sensors

San Diego, California, January 28, 2002 - Masimo Corporation, the innovator of Signal Extraction Pulse OximetryT, announced today at the 2002 SCCM Congress, that it has completed development and testing of three new pioneering products that expand Masimo's line of Low Noise Optical Probes and continue the performance leadership of the Company's Signal Extraction Technology MS boards. The three new products released are the LNOP Ear and Multi-Site LNOP YI sensors, and the MS-7T low power and low profile Masimo SET pulse oximetry printed circuit board.

Masimo's LNOP Ear reusable sensor represents an innovative design that offers all of the benefits of an ear sensor with none of the drawbacks. Ear sensors offer the advantage of providing a faster response to changes in central oxygenation. However, prior to Masimo's LNOP Ear sensor, other designs had flaws. Since previous ear sensors relied upon the monitoring site to hold the sensor in place, constriction often occurred causing problems with acquiring true and/or continuous oxygen saturation readings from the site. Masimo's LNOP Ear Sensor uses a wider measurement surface area, much softer spring and an innovative ear hanger that goes around the ear, shifting the stress point from the ear lobe to the ear itself. Masimo also offers adhesive squares that can be applied to the contact (LED and photo-detector) sites to increase the surface tension at the point of attachment without increasing the pressure. Combined with Masimo SET's ability to read under low perfusion and motion artifact with high fidelity, the Masimo LNOP Ear Sensor's innovative design allows for continuous monitoring of a patient's oxygenation at the head, which is known to show a faster response time on patients with low blood flow (low perfusion).

The LNOP YI multi-site reusable sensor is designed for use on any patient, from neonates to adults. The sensor itself is general and reusable, but an assortment of adhesive tapes enables the LNOP YI to be used as a neonatal sensor, an adult digit sensor, or even an infant toe sensor. LNOP YI also features a CleanShieldT adhesive that is unique in the industry. CleanShield wraps around the reusable LED and photo-detector, shielding the patient from coming in direct contact with the sensor, and thus minimizing the potential for cross-contamination. LNOP YI with CleanShield offers a good solution for those hospitals concerned with disposable sensor costs, but also worried about cross-contamination from using conventional finger clip or Y sensors.

Masimo also announced today, the latest OEM printed circuit board, the MS-7, which operates at just 225mW; less than one-half the typical power requirements of the MS-5T board, one fifth that of the MS-3T, and one-tenth of Masimo's first OEM board, the MS-1T. Measuring the size of a business card, the MS-7 allows the revolutionary motion and low perfusion performance of Masimo SET to now be available in battery operated portable and handheld devices. The MS-3, MS-5 and MS-7 boards carry the full Masimo SET signal processing algorithm, are backward and forward compatible with Masimo SET V2 and V3, and are sold to Masimo's licensees for incorporation to their patient monitors and therapeutic devices. Once integrated, these instruments then provide Masimo SET performance when any of the full line of Masimo single patient adhesive or reusable sensors are connected to them. To date, Masimo has licensed its Signal Extraction pulse oximetry technology to over 35 patient monitoring companies, representing over 60% of the pulse oximetry market. 

Joe E. Kiani, Chairman & CEO of Masimo, stated, "We are very excited about the release of these unique products, as they continue with the mission we created years ago. Masimo pioneered High Fidelity oximetry, first with our Signal Extraction Technology breakthrough, and then with the release of Masimo SET V3, we introduced Signal IQ, and FastSat. FastSat allowed clinicians to see for the first time rapid and deep hypoxemia as well as fast recovery to normoxia, yet without all of the false alarms. Dr. Jeremy Swan, the founding Chairman of our Scientific Advisory Board, made our goals very clear, 'deliver the highest fidelity signal possible and let the clinicians decide on how to use the newly available information'. Since then, we have been doing just that."

Kevin Mosher, President of Americas for Masimo, stated, "Masimo SET with FastSat is the only pulse oximetry technology that gives truly reliable readings of oxygen saturation at the measurement site. The measurement site of choice has and will continue to be the digit, but the head is a natural place for clinicians, especially anesthesiologists, to also use as monitoring site due to its proximity to the heart. The head, though, as a measurement site, has its challenges; for example, the forehead is not a good site for patients that are lying on their backs due to the venous blood pooling in the forehead. The LNOP Ear Sensor provides response times to changes in oxygen saturation that are equal to that of reflectance sensors, but without the limitations of reflectance sensors, such as pressure necrosis, or disparities in SpO2 measurement due to venous blood pulsation . Reflectance Sensors have been around for quite some time, but have not been used clinically due to these limitations. The LNOP Ear Sensor with Masimo SET's sensitivity, specificity and FastSat is the answer for clinicians looking for a rapid response to changing central oxygen saturation, as it overcomes the limitations of the signal to noise problems, slow response of conventional pulse oximetry, and the conventional limitations of both the ear sensor and reflectance sensor designs." 

"We're also proud to announce the MS-7," Mr. Mosher added. "The MS-7 represents the next step in the evolution of Masimo's breakthrough SET pulse oximetry technology. With MS-7, the power and performance of Masimo SET is now available in portable and battery-operated devices, and this fits nicely with Masimo's commitment to improve patient outcomes while reducing costs by taking noninvasive monitoring to new sites and applications."

New Clinical Study Shows Masimo SET^® The Choice For Monitoring Hypoxemia

Masimo SET detects 99% of true hypoxemia events, while Tyco/Nellcor N-395 detects 45%

Irvine, California, January 21, 2002 - Robert T. Brouillette, MD, Vice-Chairman of Pediatrics at The Montreal Children's Hospital, led a team of researchers in conducting a clinical study evaluating the effectiveness of pulse oximeters to accurately diagnose sleep-disordered breathing in children. The study, presented last week at the 20th Annual Annenberg Conference in Palm Springs, California, found that the Masimo SET pulse oximeter captured 98.6% of the true desaturation events, while the Nellcor N-395 captured just 45.3% of true desaturation events. Conversely, the N-395 was 2.4 times more likely than the Masimo SET oximeter to report false alarms during patient movement, causing the researchers to ask, "What oximeter characteristics are important for a pediatric sleep laboratory?" and conclude, "On such abbreviated tests, clusters of movement-related artifactual desaturations could lead the physician to the mistaken impression of sleep-related desaturation events with the potential for unnecessary diagnostic testing or even inappropriate surgery. The sensitivity and motion artifact rejection characteristics of the Nellcor N-395 are not adequate for a pediatric sleep laboratory setting." 

The study consisted of a series of three tests, involving 24 patients and comparing the Nellcor N-200 and N-395 with the Masimo SET V2 Q-400 and Masimo SET V3 RadicalT pulse oximeters. The purpose of the study was to investigate the impact of patient motion on accurate oximetry readings (motion artifacts) and its relationship to accurate diagnosis of sleep disorders. Up to 30 desaturation events were randomly selected using a random number generator, and results were acquired directly to a computerized polysomnograph. Readings were compared to those from a transcutaneous oxygen probe. The Masimo SET V2 oximeters captured 90% and Masimo SET V3 captured 99% of the true desaturations, while the Nellcor oximeters captured 76% (N-200) and 45% (N-395). The study's authors concluded, "In a pediatric sleep laboratory, use of a Masimo oximeter with very short averaging time could significantly reduce workload and improve reliability of desaturation detection."

Kevin Mosher, President, Masimo Americas stated: "Dr. Brouillette received the annual Award for Excellence at the 20th Annual Conference of Sleep Disorders in Infancy and Childhood this week, where he presented his research results. We are honored to have researchers of Dr. Brouillette's caliber conduct such clinical studies and, of course, are delighted by their results. Some competitors, unhappy with their performance, have challenged the motion and low perfusion studies done by Dr. Steven J. Barker, Chairman of Anesthesiology Department of the University of Arizona, who has tested pulse oximeters for nearly 20 years, and Dr. Nitin Shah at the University of California at Irvine, claiming their studies are not indicative of real clinical situations. In the past months, several independent clinical studies by renowned clinical researchers, Drs. Hay, Miyasaka, Poets, Trang and now Brouillette have shown conclusive clinical evidence that, not only is Masimo SET the only technology delivering on its promise of accurate monitoring during motion and low perfusion, but that Dr. Barker's motion protocol is indeed the best laboratory study for predicting a pulse oximeter's performance in the clinical setting. In fact, the results of Dr. Jopling's study at Nellcor and Mr. Jaffe's study at Novametrix do not reflect clinical performance of pulse oximeters." 

"Independent clinical studies consistently show the Masimo SET sensitivity and specificity to be in the high 90th percentile, as compared with the N-395, which demonstrates values for the same benchmarks ranging from the mid-40th percentile to the low 70th percentile, stated Julian Goldman. Masimo has been saying for years that the proof is in the performance. We are happy to see that under a variety of independent studies and conditions, the true performance advantages of Masimo SET continues to be self evident," added, Julian Goldman, MD, Masimo's Vice President of Medical Affairs. 

Kennedy Health System, Voted One of Top 100 Hospitals in America, Successfully Completes System-Wide Conversion to Masimo SET^® Pulse Oximetry

Superior Clinical Performance and Reduced Cost of Care Cited As Key Factors

Irvine, California, January 9, 2002 - Masimo Corporation, the innovator of Signal Extraction Pulse Oximetry, announced the successful conversion of Kennedy Health System to its Masimo SET technology. Key factors of this full hospital-wide conversion were Masimo SET's superior clinical performance and reduced cost of care. The versatility of Masimo's Radical, which can be used as a handheld pulse oximeter, a bedside standalone pulse oximeter, or as an upgrade device for multiparameter monitors, also played a key role in the successful conversion. The Kennedy Health System is comprised of three hospital campuses, which are located in Stratford, Washington Township and Cherry Hill, New Jersey.

"Masimo SET is the answer to previous pulse oximetry concerns," stated George Machemer, Director of Cardio Respiratory. "We had suffered from false alarms due to motion and low perfusion as well as some missed events. Now our staff can focus on patient care rather than alarm management, giving us confidence in pulse oximetry by providing us with reliable, accurate saturation values. We had looked at all the available pulse oximeters, including the latest pulse oximeter from other manufacturers, and were almost resigned to working around traditional limitations. But Masimo not only offered superior performance, they were able to update all of our pulse oximetry sites, including our existing multiparameter monitors with SatShare." 

"In today's healthcare setting we must seek and implement solutions that reduce our costs while at the same time improve patient care," stated BJ Laird, Corporate Director of Materials Management. "In addition to assessing Masimo SET's clinical performance, we have analyzed the costs associated with other pulse oximeters and have seen improvements with Masimo SET, including reduced sensor usage due to the performance, quality and durability of Masimo's single patient adhesive sensors. And because Masimo was able to update all of our pulse oximetry sites, we can finally standardize on one sensor, which further reduces cost while improving efficiency." 

"Kennedy Health System is acknowledged as one of the top 100 hospitals in the U.S.," stated Kevin Mosher, President, Americas of Masimo Corporation. "The National Benchmarks for Success 2000 study, which selected Kennedy Health System as one of the top 100 hospitals, recognizes those hospitals that demonstrate superior clinical, operational, and financial performance. Kennedy's record speaks for itself; they maintain the highest of standards, which speaks volumes about their choice of Masimo SET as their preferred pulse oximetry technology. We are honored by Kennedy's affirmation of Masimo SET and proud to be selected by an institution that represents the best in patient care." 

Masimo Announces Appointment of Kevin Mosher to President, Americas

Irvine, CA, January 7, 2002 - Masimo Corporation today announced the appointment of Kevin Mosher as President, Americas. Mr. Mosher has over 17 years experience in the medical device and high technology industries, serving in positions from Vice President of Sales and Marketing to CEO. Most recently, Mr. Mosher served as Vice President of Sales & Marketing for Masimo. Prior to Masimo, he served as Vice President of Business Development for Outbound Services, a wholly owned subsidiary of Comfort Systems USA (NYSE: FIX), where he helped create an Internet-based services and e-commerce network comprised of over 15,000 businesses and 12,000 service providers nationwide. Mr. Mosher also held the position of Chief Executive Officer of Applied Magic, a venture-backed, digital video company; Regional Sales Manager for Cadence Design Systems, a $1.5 billion per year semiconductor design software and services organization; and marketing and sales positions at Johnson & Johnson's Advanced Sterilization Products and Ethicon Endo-Surgery divisions, and with Baxter Scientific Products.

"Masimo is truly an innovator in the field of pulse oximetry, and I am honored to take on Masimo's mission as President of Americas," stated Kevin Mosher. "It's not often that a technology improves patient care while reducing costs, but that is exactly what Masimo Signal Extraction Technology (SET) does. I joined Masimo because I could see that the benefits of Masimo's technology were far reaching. Masimo SET pulse oximetry improves patient care through accurate monitoring, less arterial blood gas (ABG) draws, and faster weaning from the ventilator - allowing patients to be transferred to lower cost settings and even discharged sooner. Masimo SET also affects the lives of clinicians. Accurate, reliable feedback enables clinicians to make the right decisions for their patients, while the virtual elimination of false alarms allows them to work more efficiently. The bottom line is that by focusing less on equipment management, they can focus more on their patients. Equally impressive to me is the caliber of people at Masimo. It's a bright and energetic group, and I'm very excited to be a part of the team." 

"Kevin is a key addition to our team," stated Joe E. Kiani, Chairman & CEO of Masimo Corporation. Kevin has a wonderful and broad breadth of experience, including his engineering base, experience in sales, marketing, product development and operations, as well as experience in both the technology and medical industries. But more importantly, Kevin embodies the core values that have allowed Masimo to make the contribution that it has made to date. Those core values are all about getting business closer to the heart; where passion, commitment, truth, fascination, accomplishment and fun thrives. Kevin, in his brief tenure at Masimo, has already made a positive impact to our mission. Under Kevin's leadership, I expect Masimo Americas' commercial operation to continue to bloom."

Federal District Court Denies Nellcor's Preliminary Injunction Against Masimo

Masimo will continue to vigorously pursue its suit against Nellcor for infringing Masimo's Motion Tolerant Technology

Irvine, California, January 2, 2002 - The Federal District Court in Southern California denied Nellcor's motion for a preliminary injunction against the Masimo SET RadicalT pulse oximeter with SatShareT. Nellcor sought to prohibit further sale of Masimo's SatShare device, claiming that it violates certain patents that Nellcor contends prevent the use of other manufacturer's sensors with Nellcor's pulse oximetry products. Among other things, the Court found that Nellcor had not shown a likelihood of success on the merits at trial.

"We are pleased that the Court has decided to deny Nellcor's preliminary injunction against SatShare. We remain confident that Nellcor's entire counter-suit is baseless, and was an attempt by it to muddy the waters following our patent infringement claims against Nellcor for violating Masimo's Patents", said Joe E. Kiani, Chief Executive Officer of Masimo.

In 1999, Masimo sued Nellcor and Mallinckrodt, a subsidiary of Tyco, for infringing Masimo's motion-tolerant pulse oximetry patent. Since then, Masimo has asserted five additional patents against Nellcor's N395, MP404, and related products such as its N595.

Mr. Kiani continued, "Prior to the introduction of Masimo SET, the industry had come to accept the limitations of conventional pulse oximetry technology, which included unacceptable levels of false alarms and incorrect readings, particularly during patient conditions of motion and low perfusion. In overcoming these limitations, the Masimo Signal Extraction Technology breakthrough is a non-intuitive leap that others are now attempting to copy. Open competition and innovation serve to bring about better outcomes for patients and clinicians, and we embrace these values. We cannot, however, sit back and allow others to misappropriate technology that Masimo created, and use it without authorization. If companies such as Nellcor are allowed to misappropriate other's patented, innovative technology, innovation would stifle."