ABC has completed algorithms and preliminary engineering drawings for the ATS-500, a fully automated, end-to-end unit dose drug distribution system for hospitals and nursing homes. The ATS-500 is custom built for and fully compatible with the same software used by all U.S. government hospitals. The ATS-500 solves the two most critical drug distribution problems plaguing health care facilities: labor costs and errors. By combining inerrant digital technologies (computer, robotics, bar code, scanning), and a new conceptual design, the ATS-500 achieves previously unattainable medication dispensing speed and accuracy. It thereby dramatically reduces labor (primarily nursing and pharmacy) and virtually eliminates error. Preliminary estimates suggest that, for VA hospitals alone, ATS technology could save between $20 million and $40 million dollars per year in nursing and pharmacy labor and eliminate nearly 50 million medication errors annually. In Phase I, ABC proposes to (a) develop a computerized VA hospital drug distribution simulation with and without ATS-500 installation, respectively, in order to obtain a more accurate projection of financial impact, (b) build and test a breadboard model of key prototype components for design validation purposes.