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CORRESP
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June 9, 2005

David
Burton

Staff Accountant

Mail Stop 0306

Division of Corporation Finance

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Dear
Mr. Burton:

        On
behalf of Physiometrix, Inc. ("Physiometrix" or the "Company"), we submit this letter in response to your comments received by letter dated May 31, 2005 relating to
Physiometrix's Form 10-K for the fiscal year ended December 31, 2004 (File No. 0-27956). In this letter, we have recited your comments and have followed
each comment with Physiometrix's response. References to "we", "our", or "us" mean Physiometrix's or its advisors, as the context may require.

Form 10-K: for the Fiscal Year Ended December 31, 2004

Item 7. Management's Discussion and Analysis, page 25

Results of Operations, page 29

1.Reference is made to your negative gross margin for the years ended 2000 to 2004 as illustrated on page 25. We note that since the third quarter of 2000,
substantially all of your sales were to Baxter Healthcare Corporation (Baxter) under a distribution agreement. It appears from your MD&A, you have been recording significant write-downs on your
inventory of PSA 4000 units. On page 28, you state that of the 350 PSA 4000 units on hand, 310 units were fully reserved. In this regard, tell us and disclose in MD&A in future filings the amount of
inventory write-downs you have recorded in cost of goods sold for each year in the period 2002 through 2004. It appears from your MD&A discussion, you are selling products to Baxter at a negative
profit margin. Tell us and expand in great detail in MD&A in future filings, to specifically state the reasons for the negative gross profit margin and whether management believes such trend will
continue. Refer to Item 303 of Regulation S-K and Chapter 4 of ARB 43.

        Response:    In future filings, we will revise and expand our disclosures related to the amount of inventory write-downs and the
negative profit margin for the Company. Set forth below are our supplemental responses.

Inventory Write-downs

        In 2001, due to lower than expected demand for the PSA 4000 from Baxter and the need to modify the PSA 4000 array to improve sales, we recorded an inventory
write-down to cost of goods sold in the amount of $1.3 million for excess and obsolete PSA 4000 inventory finished goods and excess parts. We also recorded a provision for
non-cancelable purchase orders for PSA 4000 parts to cost of goods sold in the amount of $2.3 million in 2001. The company successfully re-introduced the PSA 4000 with
Baxter in 2003 following FDA approval of the current improved PSA 4000 array in the fourth quarter of 2002. There were no further inventory write-downs in 2002, 2003 and 2004.

Negative Profit Margin

        The negative profit margin situation is currently applicable to all of our products. As an FDA compliant medical device manufacturer, the Company maintains an
infrastructure in the manufacturing department to support the Quality System maintained by the Company. The cost to maintain this infrastructure combined with the labor and overhead costs for our
manufacturing facility are in excess of the margin produced on all of our sales. These costs include rent and utilities for leased space,

manufacturing
supplies, instrument calibration, benefit plans for employees, depreciation on equipment and other miscellaneous expenses in the manufacturing group. The revenue and resulting product
margin for the Company has not been enough to absorb these costs and accordingly, we have negative gross margin. This trend will continue until the volume of our revenue and product margins grow
significantly to exceed our labor and overhead cost infrastructure. Currently, we expect this trend to continue through at least 2005 and possibly beyond.

        The
following is a breakdown of the components of the income statement related to the negative gross margin from 2001 through 2004:

(In thousands)

2001

2002

2003

2004

Product margin (deficit)

$
(2,800
)
$
739

$
451

$
790

Labor costs

(679
)

(508
)

(475
)

(497
)

Over-head

(430
)

(366
)

(335
)

(344
)

Gross deficit

$
(3,909
)
$
(134
)
$
(359
)
$
(51
)

Note 2.    Summary of Significant Accounting Policies, page F-7

Revenue recognition, page F-7

2.Your accounting policy for revenue recognition states that revenue for products sales is recognized upon shipment. We note that you sell substantially all of
your products through an exclusive distributor agreement with Baxter. In this regard, revise this note in future filings to specifically state that product sales are made to a distributor under an
exclusive agreement and disclose what types of post shipment obligations or acceptance provisions you may have and how you account for such obligations when they exist. Expand note 11 to
disclose in great detail the significant terms (i.e. responsibilities of Baxter of marketing, sale and distribution of product, minimum purchase commitments, purchases at specified agreed upon prices,
etc.) of the distributor agreement.

        Response:    In future filings, we will expand the footnotes and revise the descriptions as you suggest. This will encompass the
discussion and proposed disclosures set forth below in response to questions 4 and 5.

Impairment of Long-lived Assets, page F-10

3.You state that long-lived assets are measured at the lower of carrying amount or fair value less costs to sell. This policy implies that your
long-lived assets are classified as held for sale. Revise in future filings to disclose when long-lived assets are reviewed for impairment and how you determine if impairment
of long-lived assets exists. Refer to paragraphs 7-9 of SFAS 144.

        Response:    We will revise the disclosure in future filings as you suggest.

        The
Company did not carry or classify any long-lived assets as held for sale and we will revise the footnote disclosure to the language below in future filings.

        The
Company follows Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
No. 144), which requires that long-lived assets used in operations be measured at the lower of carrying amount or fair value.

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For the Quarterly Period Ended March 31, 2005

Financial Statements

Note 6.    Subsequent Events, page 9

4.We note on May 3, 2005 you entered into an amendment to your distributor agreement with Baxter which provided for revised termination provisions, revised
product pricing and repurchased provisions of the PSA 4000 and PSArrays. Tell us and in future filings expand in great detail to disclose in the footnotes to the financial statements and MD&A the
revised terms (such as revised termination provisions, revised product pricing and repurchased provisions) of the distribution agreement. Your response should include your proposed disclosure of the
amended distribution agreement with Baxter.

        Response:    In future filings, we will revise the footnote and MD&A disclosures to incorporate the following information:

        The
following is the proposed MD&A disclosure:

        In
May 2005, Physiometrix and Baxter entered into an amendment to their Distribution Agreement. Pursuant to this amendment, Baxter will continue the sales efforts for the PSA 4000
through December 31, 2005 or until the exhaustion of all existing Baxter inventory of PSA 4000 monitors. Baxter will continue to sell PSArrays to Baxter customers until December 31,
2007, unless Physiometrix exercises the repurchase provision included in the amendment, in which case, sales would end on the repurchase date. Prior to December 15, 2005, Baxter can purchase
additional PSA 4000 monitors at a price of $1,000 per unit from the company. Baxter may purchase PSArrays at a cost of $7.50 per unit and Baxter has the exclusive right to sell the PSArray for use
with the PSA 4000 monitor through December 31, 2007.

        Marketing
and sale of the new PSA 5000 monitor will be the sole responsibility of Physiometrix and Baxter will receive a $200 placement fee for each sales lead that results in a sale or
a Physiometrix sale of the PSA 5000 into a Baxter account. In the event that Physiometrix sells the PSA 5000 into an Existing Baxter Account, Physiometrix will provide a baseline revenue stream" to
Baxter. This baseline revenue stream payment is a mechanism to compensate Baxter for a reduction in sales of PSA 4000 arrays due to the customer purchasing PSA 5000's and new PSA 5000 arrays from
Physiometrix. The baseline revenue stream payment would be computed and paid quarterly using a formula based on the number of PSA 4000 and 5000 monitors installed at Baxter accounts and an assumed
array usage rate per installed monitor. The formula then nets out actual array sales into these accounts by Baxter. This baseline fee would be accrued in the period incurred. This will continue to be
in effect through December 31, 2007 or until this agreement is terminated.

        Physiometrix
may exercise a repurchase option to buy back Baxter's inventory and customer lease accounts and sell directly to all the PSA 4000 customers. Physiometrix may exercise this
option at six-month intervals beginning on December 15, 2005 or at any time in the event of a change of control of Physiometrix. If Physiometrix exercises the repurchase option,
Physiometrix would pay $1,000 per PSA 4000 monitor in Baxter's inventory or under lease at a Baxter account and $15.00 per PSArray in Baxter's inventory that were returned to the Company. The Company
had previously sold PSA 4000 monitors to Baxter at prices between $1,000 and $4,450 per unit and PSA 4000 arrays at prices from $7.50 to $9.75 per unit. Physiometrix may exercise this option only with
respect to all of the PSA 4000 monitors and PSArray business and not a partial amount. Upon Physiometrix's exercise of the repurchase option, the distribution agreement with Baxter and all of Baxter's
rights with respect to the PSA 4000 and PSArray products will terminate.

        On
June 1, 2005, pursuant to an Agreement and Plan of Merger, dated as of May 31, 2005, by and among Hospira, Inc., Patriot Merger Subsidiary Corporation and
Physiometrix, Inc., Physiometrix notified Baxter of its intention to exercise the re-purchase option upon a change of control. This

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re-purchase
is expected to occur in connection with, and contemporaneous with, the closing of the merger targeted to close in the third quarter of 2005. The exercise of the option will be
conditioned upon the consummation of the merger. If this occurs or is reasonably expected to occur, Physiometrix will not record revenue in the second quarter of 2005 or beyond for sales of PSA 4000
monitors and PSArrays that are subject to re-purchase from Baxter.

        The
following is the proposed footnote disclosure

        In
May 2005, Physiometrix and Baxter entered into an amendment to their Distribution Agreement. Pursuant to this amendment, Baxter will continue the sales efforts for the PSA 4000
through December 31, 2005 or until the exhaustion of all existing Baxter inventory of PSA 4000 monitors. Baxter will continue to sell PSArrays to Baxter customers until December 31,
2007, unless Physiometrix exercises the repurchase provision included in the amendment, in which case, sales would end on the repurchase date. Prior to December 15, 2005, Baxter can purchase
additional PSA 4000 monitors at a price of $1,000 per unit from the company. Baxter may purchase PSArrays at a cost of $7.50 per unit and Baxter has the exclusive right to sell the PSArray for use
with the PSA 4000 monitor through December 31, 2007.

        Marketing
and sale of the new PSA 5000 monitor will be the sole responsibility of Physiometrix and Baxter will receive a $200 placement fee for each sales lead that results in a sale or
a Physiometrix sale of the PSA 5000 into a Baxter account. In the event that Physiometrix sells the PSA 5000 into an Existing Baxter Account, Physiometrix will provide a baseline revenue stream" to
Baxter. This baseline revenue stream payment is a mechanism to compensate Baxter for a reduction in sales of PSA 4000 arrays due to the customer purchasing PSA 5000's and new PSA 5000 arrays from
Physiometrix. The baseline revenue stream payment would be computed and paid quarterly using a formula based on the
number of PSA 4000 and 5000 monitors installed at Baxter accounts and an assumed array usage rate per installed monitor. The formula then nets out actual array sales into these accounts by Baxter.
This baseline fee would be accrued in the period incurred. This will continue to be in effect through December 31, 2007 or until this agreement is terminated.

        Physiometrix
may exercise a repurchase option to buy back Baxter's inventory and customer lease accounts and sell directly to all the PSA 4000 customers. Physiometrix may exercise this
option at six-month intervals beginning on December 15, 2005 or at any time in the event of a change of control of Physiometrix. If Physiometrix exercises the repurchase option,
Physiometrix would pay $1,000 per PSA 4000 monitor in Baxter's inventory or under lease at a Baxter account and $15.00 per PSArray in Baxter's inventory that were returned to the Company. Physiometrix
may exercise this option only with respect to all of the PSA 4000 and PSArray business and not a partial amount. Upon Physiometrix's exercise of the repurchase option, the distribution agreement with
Baxter and all of Baxter's rights with respect to the PSA 4000 and PSArray products will terminate.

        On
June 1, 2005, pursuant to an Agreement and Plan of Merger, dated as of May 31, 2005, by and among Hospira, Inc., Patriot Merger Subsidiary Corporation and
Physiometrix, Inc., Physiometrix notified Baxter of its intention to exercise the re-purchase option upon a change of control. This re-purchase is expected to occur in
connection with, and contemporaneous with, the closing of the merger targeted to close in the third quarter of 2005. The exercise of the option will be conditioned upon the consummation of the merger.
If this occurs or is reasonably expected to occur, Physiometrix will not record revenue for sales in the second quarter of 2005 or beyond of PSA 4000 monitors and PSArrays that are subject to
re-purchase from Baxter.

5.In light of the fact that you entered into a revised distributor agreement with Baxter that provides for the repurchase by you, at your option on specific
dates, of all PSA 4000 and PSArrays in Baxter's inventory, tell us and disclose in future filings how you considered the impact of such repurchase option on your current revenue recognition policy.
Refer to Question 2 of' SAB Topic 13. Confirm to us that a similar arrangement with a repurchase feature was not previously in place.
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        Response:    On May 3, 2005, the Company and Baxter agreed to amend the existing distribution agreement to allow the
Company the right to repurchase any inventory previously sold to Baxter. As discussed in our response to question 4, we may exercise a repurchase option to buy back Baxter's inventory and customer
lease accounts and sell directly to PSA 4000 customers at six-month intervals beginning December 15, 2005 or in the event of a change of control of Physiometrix. Prior to the
May 2005 amendment, the Company had no such right to terminate the distribution agreement by repurchasing inventory from Baxter.

        With
respect to its current revenue recognition policy, the Company concluded that since it had no intent to exercise such option and, therefore, Baxter had no expectation that such
repurchase would occur, the Company's revenue recognition policy should not change. Furthermore, because the option belongs to the Company and not Baxter, the option does not give Baxter a right to
return inventory and the mere existence of the o