A Medical Device Daily

Patient Safety Technologies (PST; Los Angeles)reported that it has closed on $1.59 million in equity financing in a first closing of a private placement.

The company said the proceeds will go towards further capitalizing SurgiCount Medical (Temecula, California) in its efforts to gain market share.

Investors in the first closing of the private placement purchased 1,272,000 shares of the company’s common stock at a price of $1.25 per share and received a 5-year warrant to purchase an additional 763,200 shares of the company’s common stock at an exercise price of $1.40 per share. The investors paid $1.5 million in cash and agreed to extinguish $90,000 in existing debt owed to them by PST.

The company may sell up to an aggregate of $3 million worth of common stock and warrants by no later than Nov. 16.

“This round of financing comes at a time when pressure from both industry and regulatory organizations has brought increased attention to the need for greater patient safety by hospitals. Effective October 1, 2008, Medicare at the direction of the Bush Administration, will no longer cover costs associated with the treatment of serious preventable events, such as a sponge or another object left in a patient during surgery. Private insurers are currently considering making similar changes. Furthermore, hospitals are experiencing increased pressure from accreditation organizations to eliminate these preventable types of medical errors.

We intend to use a portion of the proceeds from this financing to satisfy the increase in interest that we are experiencing as a result of these recent environmental changes as well as an overall increased awareness of SurgiCount and its Safety-Sponge system,” said Bill Adams, PST’s president and SurgiCount’s CEO.

SurgiCount, a wholly owned subsidiary of PST, is a provider of patient safety products and services. Its Safety-Sponge is a computer-assisted sponge counting system for surgeons.

Integrated Healthcare Holdings (IHHI; Santa Ana, California), the owner of four Orange County hospitals, reported that it has completed a major re-financing of all of its debt instruments.

The company said that it closed escrow on four debt instruments with Medical Capital and affiliates in the total amount of $140.7 million, which restructures all of the company’s existing debt instruments, reduces its borrowing costs by more than $5 million annually, and provides the company access to additional capital.

Bruce Mogel, CEO of IHHI said that, “the debt restructuring was made possible by the excellent work done by IHHI’s management team in improving revenue and reducing costs, which have contributed to the creditworthiness of the company and allowed it to borrow at lower rates. Simultaneously,” Mogel added, “the company has also settled a long standing dispute with its landlord, a physician investment group, which will allow the company to turn even greater attention to operations in its four Orange County hospitals.”

IHHI is a partially physician-owned management company that operates 282-bed Western Medical Center (Santa Ana); 188- bed Western Medical Center (Anaheim); 178-bed Coastal Communities Hospital (Santa Ana); and 114-bed Chapman Medical Center (Orange).