RFID EDITOR'S NOTE
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A Healthy ROI
Our special report on RFID in healthcare makes it clear that hospitals can achieve a return on investment in the technology.
By Mark Roberti
Oct. 24, 2004—There has been a great deal of discussion about what exactly the business case is for deploying RFID in a lot of industries. Given tag prices today—25 cents and up for a simple license plate UHF tag—it’s a challenge to find a return on investment (ROI) in many industries. Healthcare is not one of them.
Many of the assets used in the health-care industry are expensive. It's obvious that if hospitals can improve the utilization of a $3,000 defibrillator or an ECG monitor, they can achieve a healthy return on investment. But in our three-part series on RFID in Healthcare, authors Brad Sokol and Sapan Shah reveal that the real ROI comes with tracking objects in a hospital that cost as little as $95.
"The majority of an operation’s inefficiencies are found at a micro level (one wheel chair: $500)," the authors write. "Tagging items at this value level will help improve the actual individual caregiver’s efficiency, regulatory compliance, organizational confidence and patient safety. The current projects don’t address the overall outcome due to their limited scope and concentration on only high-valued assets."
This might seem counterintuitive at first, but Sokol and Shah back it up with numbers based on the real costs hospitals have today and the real prices for RFID tags and readers, installation and data integration. The authors recommend that hospitals create a deployment plan by looking at their departments and breaking that down even further by procedures within each department.
"By dividing each department into a matrix of horizontal boxes representing medical devices and vertical rows representing procedures, one can track the reusability (repetitive use) of one item/device through the organization’s multiple departments," the authors write. "This visual matrix shows how to maximize asset and operational planning of each tracked item, increasing the resulting ROI through gained asset and operational efficiencies, thus yielding the items true utility (value)."
The benefits to deploying RFID according to the authors' "micro-modular" approach are broken down across a number of areas, including labor savings, inventory reduction, regulatory compliance, threat detection (the costs incurred due to hazards from various surgical instruments), even taxes (many states offer tax credits to hospitals that upgrade their information systems).
Using RFID in healthcare is different from using it in, say, the consumer packaged goods industry. The healthcare industry is highly regulated and patient safety is a critical issue (fortunately, no one dies if a pallet of Cheerios is sent to the wrong distribution center). But the micro-modular approach proposed by Sokol and Shah could well be used in other industries, such as automobile and airplane manufacturing. And even if you're not in these industries, end users who read the report should, at the very least, come away with the knowledge that the ROI from RFID is not always found in the obvious places or by taking the obvious approach.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.
RFID Journal Home
Oct. 24, 2004—There has been a great deal of discussion about what exactly the business case is for deploying RFID in a lot of industries. Given tag prices today—25 cents and up for a simple license plate UHF tag—it’s a challenge to find a return on investment (ROI) in many industries. Healthcare is not one of them.
Many of the assets used in the health-care industry are expensive. It's obvious that if hospitals can improve the utilization of a $3,000 defibrillator or an ECG monitor, they can achieve a healthy return on investment. But in our three-part series on RFID in Healthcare, authors Brad Sokol and Sapan Shah reveal that the real ROI comes with tracking objects in a hospital that cost as little as $95.
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This might seem counterintuitive at first, but Sokol and Shah back it up with numbers based on the real costs hospitals have today and the real prices for RFID tags and readers, installation and data integration. The authors recommend that hospitals create a deployment plan by looking at their departments and breaking that down even further by procedures within each department.
"By dividing each department into a matrix of horizontal boxes representing medical devices and vertical rows representing procedures, one can track the reusability (repetitive use) of one item/device through the organization’s multiple departments," the authors write. "This visual matrix shows how to maximize asset and operational planning of each tracked item, increasing the resulting ROI through gained asset and operational efficiencies, thus yielding the items true utility (value)."
The benefits to deploying RFID according to the authors' "micro-modular" approach are broken down across a number of areas, including labor savings, inventory reduction, regulatory compliance, threat detection (the costs incurred due to hazards from various surgical instruments), even taxes (many states offer tax credits to hospitals that upgrade their information systems).
Using RFID in healthcare is different from using it in, say, the consumer packaged goods industry. The healthcare industry is highly regulated and patient safety is a critical issue (fortunately, no one dies if a pallet of Cheerios is sent to the wrong distribution center). But the micro-modular approach proposed by Sokol and Shah could well be used in other industries, such as automobile and airplane manufacturing. And even if you're not in these industries, end users who read the report should, at the very least, come away with the knowledge that the ROI from RFID is not always found in the obvious places or by taking the obvious approach.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below.
RFID Journal Home
READER'S COMMENTS
A Healthy ROI
Dear Mr. Roberti: We definitely agree with Mr. Sokol and Mr. Sha's modular approach to implementing RFID in healthcare. My company is currently developing an RFID solution for the healthcare industry and since conception our approach for development is to be modular, what I mean by that is that departments within a healthcare organization need to be assessed individually as they may have unique requirements. As stated in the three part report healthcare organization need to start addressing the decline of profitability and start reducing capital asset expenses and overall operation expenses. One thing that needs to be noted is that expenses are not always tied to a specific capital asset but also to productivity of personnel that spend time searching the enterprise for those assets. Patient safety is of major concern to healthcare organizations and last but not least the security factor of tracking personnel or individuals in sensitive or secure areas. From a modular perspective it would be easier to justify a return on the investment by demonstrating that healthcare organizations do not need to invest in a full blown RFID solution where is not needed. Once the RFID infrastructure is designed and implemented other departments can go on line with relative ease. The three part report should be an excellent point of reference for Healthcare IT Executives looking to implement an RFID solution. We have been providing IT services for the Healthcare Industry for over 20 years and we know about healthcare regulations and our conclusion is that RFID address many of those regulation requirements especially with relation to Patient Safety. Thank you for the opportunity to submitt our comments. Sincerely,' Charles Olmeda Healthcare Information Technology Services, LLC
Posted By: i. gray 11/08/2004 at 12:50:53 PM