Encision Inc. hopes a new face and a new place are just the changes it needs to capture more sales in a market it says is awakening.

The Boulder company, founded as Electroscope in 1991, has quietly built its business making safety-oriented instruments and monitors for surgeons.

More than 400 hospitals use the company's equipment. Notable medical schools, including the University of Louisville's School of Medicine and the Texas Tech University Health Sciences Center, incorporate Encision's technology.

Getting to this point hasn't been easy, though. The business spent a decade refining its products. Profitability didn't come until the last couple of years, but the company has dipped back into the red this year as it ramps up sales efforts. Since inception, it's accumulated $15.6 million in operating losses.

Still, Encision only has room to grow as hospitals, medical groups and surgeons learn about the protection its devices provide patients who undergo laparoscopic surgeries, says founder Roger Odell.

More than 4 million of the surgeries take place each year across the country, and while the number of injuries from them is small, Encision says the significance of the ones that do occur is enough for practitioners to take notice.

"It's not a matter of if, but of when" the safety issues become widely known, Odell says.

A new head executive and a new headquarters, both of which came this summer, should help the company as it spreads the word on its patented Active Electrode Monitoring tools, he says.

Ensuring safety

Surgeons use laparoscopy for a wide variety of major procedures, including gallbladder removals, appendectomies, hysterectomies and gastric bypasses. Laparoscopy employs a scope, allowing doctors and nurses to watch a television monitor as they steer instruments -- which feature diameters the sizes of drinking straws and lengths between 35 centimeters and 45 centimeters -- into the body.

The approach requires much smaller incisions than open surgeries, speeding recovery times. It also can include the use of a technique involving ultra-hot electrical currents for coagulating blood. That reduces blood loss and keeps the physician's field of view clear.

Electrical generators made by companies like Tyco International's Valleylab in Boulder, Olympus and other medical device heavyweights power the instruments.

As Encision sees it, the surgery techniques and the generators are fine.

The problem: There are no safety mechanisms to detect whether any tiny defects in the instruments are allowing stray energy to burn tissue beyond where the doctor intends. And since human tissue can conduct electricity, there's no way to make sure currents aren't unintentionally drawn away from the instruments to places they shouldn't go.

"The physician is playing Russian Roulette with (the instruments)," Odell says.

The potential burns, at a searing 1,200 degrees Fahrenheit, can lead to severe, life-threatening complications.

Enter Encision's AEM Surgical Instruments. They contain shielding and extra insulation to help prevent the knicks and breaks that can allow electricity to escape.

In addition, a monitor attached to the generator tracks both the instruments' performance, as well as any situations in which neighboring tissue begins to conduct. If either occurs, the monitor automatically shuts the generator down and sounds an alarm.

Odell likens Encision's products to the standard ground fault circuit interrupters used in home bathrooms and kitchens, which look and act like traditional electrical outlets, but shut down if a surge occurs.

"All we're trying to do is bring your hospital up to code with your home," he says.

Cresting wave

Hospitals and surgeons aren't required to use devices with installed safety mechanisms. But Odell says he believes that will change as the costs and risks become better known. An August 2000 study released by the Physician Insurers Association of America showed more than $149 million in damages, plus another $40 million in costs, were paid nationwide dating back to 1991 for claims involving injuries from laparoscopic procedures.

In the past five years, the Association of Operating Room Nurses, along with other risk-management, surgical and engineering groups and publications, have made recommendations advocating the monitoring as an additional safety precaution.

Gerald Kirshenbaum, a general surgeon in Aurora who has used Encision's products for a decade, says the frequency of burns nationwide is very low, and that helps explain why more medical centers and surgeons haven't adopted the technology yet.

"It's a low percentage problem. But when it happens, it's a big problem," Kirshenbaum says. "And it's totally avoidable if you're willing to use this technology."

That kind of buzz will draw attention to Encision, Odell says.

"In our business, a lot of it is driven by word of mouth," he says. Nearly all of the company's revenue flows from repeat customers, he adds, and the costs of the initial conversion are minimal since hospitals often replace their instruments every 12 to 18 months anyway.

Encision (AMEX, ECI, $2.60) logged sales of $3.8 million between April and September. In that stretch, the company lost $347,351 from operations -- meaning it spent more money than it generated in sales -- compared to income from operations of nearly $72,000 during the same stretch last year, when sales stood at $3.6 million.

Odell says the extra expenses mostly stem from the hiring of three direct sales representatives and several engineers to "get the sales and earnings slope back on line."

In June, the company brought in Jack Serino as its new president and CEO to replace James Bowman, who resigned those positions after four years but remains a shareholder. Serino possesses 15 years of experience with medical devices.

The company also signed a five-year lease to relocate its 27-employee headquarters in late July from 4828 Sterling Drive to 20,000 square feet at 6797 Winchester Circle.

Serino estimates the overall U.S. market opportunity for the products stands between $400 million and $500 million, while the global one runs between $700 million and $800 million.

Odell says he sees the demand just starting to form.

"The wave is cresting," he says. "Our hope is, as the crest of the wave forms, that (our devices) will become a mandatory requirement."