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This article by Barbara Fox was prepared for the January 17,

2001 edition of U.S. 1 Newspaper. Additional information on Inc. was added after the edition went to press. All rights


Heart Messages

Ray Watrous’ new Siemens spinoff updates the old-fashioned


Picture it as a Norman Rockwell painting — the

little girl has brought her ailing doll to be cured by the family

doctor. The doctor, stethoscope in his ears, is listening very


to the doll’s heart.

Rockwell might paint that scene differently today. To reflect today’s

healthcare practices, the doctor could be giving the doll one of


expensive tests, an EKG or an echocardiogram. Studies show that


care physicians (the general practitioners) are referring too many

patients to cardiologists for fancy tests. They are also referring

too few, because they are failing to detect latent cases of valvular

heart disease. Why? Skills in "hearing" heart problems with

a stethoscope have atrophied.

If only we had a "magic stethoscope," an instrument that could

non-invasively and automatically "read" the health of the

heart, then we could use it both in monitoring patients and perhaps

in acute care situations. Such a instrument used during a routine

examination could connect your heartbeat, captured and interpreted

by new software, to an expert.

Ray Watrous, a researcher at Siemens Corporate Research (SCR) on


Road, thinks he has just such an amazing device. Watrous has the


of a lifetime — to go off on his own to start a high tech company

yet be backed by an international mega firm. He and his cohorts at

Sound Diagnostics, a young Siemens spinoff, are working with signal

processing technology to record and analyze the acoustic signals of

the heart. Their instrument, called an Auscultation Assistant, uses

algorithms to find abnormalities in the acoustic signals and gives

information to help with a diagnosis. His firm is announcing an

investment partner, Inc., this week.

Skill in using a stethoscope has been neglected among primary care

physicians for 20 years, says Watrous. "We concluded there was

a real opportunity here for speeding the time of therapy." His

instrument would save money every time it prevents a needless visit

to the echocardiogram lab, a visit that can cost from $1,000 to


"There are strong incentives for improving the diagnostic accuracy

of cardiac auscultation," says Watrous. "Computer-assisted

auscultation — listening to the heart with a stethoscope —

will dramatically improve the ability of listeners to detect


and by providing wireless access to a web-based signals archive,


will be able to access patient data, perform serial comparisons, and

make online referrals."

Different kinds of electronic or digital stethoscopes are on the


now for under $400, but their purpose is to record, not analyze the

data. And other telemedicine devices do transmit other kinds of heart

data. But the Sound Diagnostics instrument would be a very advanced

tool in the telemedicine revolution.

In 1998 Siemens’ Andy Zawadzki estimated the home automation market

would be $4 billion in the United States by 2002. Other estimates

put the growth rate in telemedicine at more than 35 percent a year

for the next five years. Over the next three years hospitals are


to buy information systems worth more than $14 billion.

Kevin Pezzi used to be an attending physician in a large teaching

hospital. "Very few of the residents knew what they were doing

when it came to auscultation — cardiac sounds," says the


physician/inventor. Pezzi has developed an electronic


that represents the heart sounds in a graphic format (

Not having seen the Siemens device, he points out that EKGs are far

more sensitive than sound, "and EKG technology is very easy to


"Telemedicine is a very fast growing segment of all the monitoring

services," says Frank Movizzo, owner and CEO of MedNet Healthcare

Technologies, a firm that transmits electrocardiograms over telephone

lines ( Based on Ludlow Drive in Ewing, his 62-person,

$7 million firm sells both heart monitors and software management

systems. "Telemedicine can help people in rural areas and those

that are too sick to make a doctor’s visit. The pressure from


to keep the cost of healthcare down is also a plus for telemedicine,

and HMOs are always looking for cost-saving devices."

"Along with telemedicine will come the advancement of clinical

output, neural networking (artificial intelligence)," says


"More devices that are web-based, trans-telephonic, and wireless

will have analysis components. But nothing will replace anything


he warns. "You will still need the EKG to look for arrhythmia

and abnormal beats. And you still may need an echocardiogram to look

at organ damage."

"The new instrument could prevent unnecessary testing — a

shotgun approach to diagnosis — or trigger some needed


says Movizzo. "Any information you give a physician that is more

than a shotgun approach would be helpful. Many paths can lead from

prognosis to diagnosis, and technology aids in choosing the right


The son of the chief engineer at American Viscous Plant Avisun Corp.

in Marcus Hook, Watrous went to the University of Pennsylvania’s Moore

School of Electrical Engineering, Class of 1971. He has a PhD in


science from Penn and has worked at Siemens for 15 years. He met his

wife when she was in nursing school, and they have four children,

ages 15 to 20, all home schooled.

Watrous’ entrepreneurial journey began when he went sailing on Lake

Carnegie just after he had had a strenuous workout on a rowing


"I pulled a muscle in my chest and was quite sure it was a muscle

strain," says Watrous. "But I spent a few hours at Princeton

Medical Center’s ER and it turned out, of course, not to be a heart

attack. That started me thinking about helping people to determine

how to tell whether or not their chest pains are myocardial


Many people try to talk themselves out of it for a couple of hours,

promising themselves to call 911 after another hour goes by. By then

it may be too late."

"We started thinking about ways to combine non-invasive cardiac

sensors to build up a composite picture of heart function," says

Watrous. Advanced technology on an inexpensive platform like the PC

can be low cost and made available to people in their homes, he says.

In 1997 Watrous and his team began working on a prototype that


multiple sensors (ECG, phonocardiogram, and pulse oximetry sensors),

signal processing algorithms, and Bayesian networks for probabilistic

reasoning. Their prototype algorithm is able to identify basic heart

sounds and murmurs and come up with clinical findings that could help

physicians and other healthcare providers in distinguishing innocent

heart murmurs from dangerous ones.

The device "listens" to the blood flow, the opening and


of the valves, and the turbulence generated by failures of the valves

to close. This is difficult for humans to hear because many of the

important sounds are below the threshold of human hearing.

Sound Diagnostics, formed in 1999, is the first SCR spinoff in 10

years; the most recent was Gradient Technology. SCR, which has 150

people on College Road, is one of five R&D centers worldwide for


AG, based in Berlin and Munich. SCR has invested in it through its

venture capital arm, Siemens Venture Capital.

"This is an exciting opportunity to commercialize a technology

developed at SCR by participating in the capitalization of a new

company," says Thomas Grandke, president and CEO of SCR.

But Siemens’ investment was contingent on finding external


"Right now the Siemens spinoff is a one-product, one-technology

firm, and it is hard to build a company around one technology,"

says Tony Warren, of Adams Capital Management, who had been introduced

to company officers at the Silicon Garden + Angels Investors Network,

run by Dan Conley. "Venture investors want a road map to several

portfolio products."

A strategic corporate investor —, Inc. (Nasdaq: SPDE, —

has been brought forth and has agreed

to provide seed funding to develop and commercialize the technology

in exchange for an equal stake in the venture with SCR. As a result

of this agreement, Sound Diagnostics Inc. now owns the three patents


are pending. The agreement — to be announced January 16 — is

expected to involve clinical trials, scaled up production, and proof

of prototype. SCR and Speedus will have equal stakes in Sound


Speedia Wireless, a wholly-owned subsidiary, has an exclusive contract

with SDI to design and develop wireless applications and also to

provide transaction processing to support the commercial rollout of

SDI’s cardiac diagnostic products. This subsidiary has end-to-end

wireless solutions (

Says Watrous: "I am very excited about working on a technology

that I was involved in developing. The idea of a growing a company

and adding value and seeing it grow is tremendously exciting."

— Barbara Fox

Siemens Corporate Research Inc., 755 College Road,

Princeton Forrestal Center, Princeton 08540. Thomas Grandke, president

and CEO. 609-734-6500; fax, 609-734-6565.

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