RFID SPECIAL REPORTS
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Part 1: RFID in Healthcare
ATTACHMENTS
Previous research has never been publicly offered concerning several proofs to our postulates. We have done extensive research and some field interviews to extrapolate our cost justification assumptions. Everything what we believe appears to be borne out by these observations and research. Our field research has found these figures are well within the parameters of acceptability. This section explains the figures we used.
Labor estimate per device (national averages):
--Operating Rooms per Hospital: 8
--Number of procedures performed in a day for an operating room: 8
Asset visibility (time saved per day)
--Time searching for equipment, site verification before and after procedure, sequential stockings
--Number of operating rooms x number of procedures x average minutes saved= Average saved minutes a day.
--8 Operating Rooms x 8 Procedures x 9 average minutes a saved = 576 minutes
Workflow: Field studies claimed this was a soft cost
--Automation of "Chart count" and patient paper work.
--Faster set up and clean up of surgical room.
CFO’s suggested this was a soft cost because people are already doing that work. However this would add an additional 256 Minutes
Improving sequence: Checking for epired items/recycling of unused sterile supplies
--Number of operating rooms x number of procedure x average minutes saved31 = Average Minutes saved a day.
--8 OR x 8 Procedures x 4mins = 256 minutes
Labor fixed cost
--Average salary and benefits of one surgical team made up of 2 doctors and 3 nurses (not counted in labor amount are indirect support,
1 administrator, 1 housekeeping staff, 1 aid and 1 orderly) : $1,400,000, ÷ 10,400 hrs a year (5 people x 2,040hrs a year) / 60 minutes an hour = $2.25 a minute.
--Total timesaving = 832 minutes or 13.87 hours a day (2 persons), which is time for one additional OR procedure per day.
Total time savings a day x average earning per minute = total cost savings a day: 832 minutes x $2.25 a minute = $1872 a day savings
Cost per device in labor
--Daily savings divided by average number of items (36,000) in a hospital: $1,872 savings a day ÷ 36,000 items in a hospital = 5.2 cents per device a day.
--Total hard labor savings for a hospital per medical item is approximately 2 percent of labor cost in a hospital.
--Field research suggested that there is at least a 5 to 15 percent labor savings.
Assumptions
--35,000 reoccurring medical instrument turnover in inventory at 1.0 times a year.
--37,000 medical instruments or devices are on hand any given day
--If all the instruments of the hospital were allocated per bed, there would be 10 medical devices +58 instruments = 68 devices per bed.
--Hospital has a network.
RFID Equipment Required
--70,000 passive 13.56 MHz tags, 2,000 active (battery-powered) tags
--Active and passive readers, handhelds and mounted
--Antennas
--RFID middleware
Assumptions for Cost Justification
--10 medical devices average life = 6 years
--10 average number of devices per bed = 10 total devices needed a year per bed x 200 beds= 2,000 required per year
--58 hospital instruments allocated per bed x 300 percent stock on hand= 175 plus one inventory turn of an additional 175 x 200 beds= 70,000 per year. This number includes instruments in other departments.
--Patients room = 16.4 per bed
--OR 240 items x 8 rooms = 1,920 ÷ 200 beds = 9.6 per bed
--Remaining hospital 16 departments x 525 items per depart = 8,400 ÷ 200 beds= 42.0 per bed
--Physio, Bio lab, Ambulatory, Pediatric, Radiology, Cardiology
--Acute Care, Pharmacy, Pathology, Emergency, Oncology,
--Orthopedics, Medical Billing, Facilities Management, Information Systems,
--Patient Administration, Medical Laboratory
Total : 68 per bed
Costs Based on the following Assumptions
Tags
--Assumption: Labor costs = 50 cents a tag
--Tags cost, including labor
2,000 active tags at $12 each = $24,000
+ 35,000 passive tags at 75 cents = $26,250
Total = $50,250
Inventory turn: Annual cost of tag replacement, including labor.
75 cents x 35,000 tags= $26,250
Readers and Antennas
--Readers 300 passive readers at $600 each = $180,000
--Readers 200 active readers at $1,000 each= $200,000
--Antennas: each 1 reader can handle 4 antennas.
--800 antennas at $150 each = $120,000
RFID Physical installs
--Assumption: 10 people for one month at 150 hours each
--RFID Physical install (readers, antennas, wiring): 1,500 hours at $100 an hour = $150,000
Change in Process
--Assumption: $50 is average IS in-house hourly cost and 8 people at --125 hours a month for two months.
--Change in process: 2,000 man hours at $50 an hour = $100,000
System and Hardware Upgrade Cost
--Assumption: Middleware is $30,000; hardware, networking, LAN = $70,000.
--Medical financial, supply, materials management software = $400,000.
--System and hardware upgrade cost for tracking and OR software = $500,000
Training of Staff
--Assumption: $50 an hour x 2 (because a person being trained is while not doing his job while in class); 25 people at 16 hours each.
--Training staff: 400 hours at $100 per hour= $40,000
Total: $1,366,500
--Total cost of an RFID project per item = $1,366,500 ÷ 72,000 devices= total added cost of a device: $18.98
--Total Value of Each Device:$99.35
($90 original cost + $9.35 added value)
--RFID Cost per Device: $98.98
($1,366,500 divided by 72,000)
Difference: $0.37
Justification for the combination of readers and tags
Background information on physics provided by InfoWave Solutions, CEO, Rich McGillicuddy
Cost of Active Tags
One of the big issues with the active tags is the cost. Even at $12 each, the tags are very expensive. The price of these tags is on its way down, to below $10 in the near future. But even at $12 with (0.3 percent shrinkage of tags per day), the daily cost of the tag is $0.04 (estimated battery life of 7 years at a 2.5 chirp rate). If an IV Pump costs $25 per month to lease, the additional $1.50 to make sure that your utilization is high and shrinkage is low, seems like a smaller price to pay
Reader/Antenna Placement
Readers for Passive Tags
At points of consumption or execution, deploy simple tabletop readers that provide visual or audible indicators to let the personnel know that the items have been read. Install a separate set of readers at a chute or conveyor located at inventory areas for quick inventory check-in and department-to-department delivery, and at points of execution where the items needed for the procedure are bubble packed.
Readers for Active Tags
Active tags require readers in or around the ceiling and probably one every room for the coverage area. This area could be the whole hospital or specific floors or departments, depending on how detailed you want coverage. Realize that if you do not cover an entire hospital, once the asset is outside the range of the readers, it appears lost or gone. You would know where and when it left your sight but not much more than that. You can also setup alerts and alarms if items go outside of prescribed areas or go through exits.
Previous research has never been publicly offered concerning several proofs to our postulates. We have done extensive research and some field interviews to extrapolate our cost justification assumptions. Everything what we believe appears to be borne out by these observations and research. Our field research has found these figures are well within the parameters of acceptability. This section explains the figures we used.
Labor estimate per device (national averages):
--Operating Rooms per Hospital: 8
--Number of procedures performed in a day for an operating room: 8
Asset visibility (time saved per day)
--Time searching for equipment, site verification before and after procedure, sequential stockings
--Number of operating rooms x number of procedures x average minutes saved= Average saved minutes a day.
--8 Operating Rooms x 8 Procedures x 9 average minutes a saved = 576 minutes
Workflow: Field studies claimed this was a soft cost
--Automation of "Chart count" and patient paper work.
--Faster set up and clean up of surgical room.
CFO’s suggested this was a soft cost because people are already doing that work. However this would add an additional 256 Minutes
Improving sequence: Checking for epired items/recycling of unused sterile supplies
--Number of operating rooms x number of procedure x average minutes saved31 = Average Minutes saved a day.
--8 OR x 8 Procedures x 4mins = 256 minutes
Labor fixed cost
--Average salary and benefits of one surgical team made up of 2 doctors and 3 nurses (not counted in labor amount are indirect support,
1 administrator, 1 housekeeping staff, 1 aid and 1 orderly) : $1,400,000, ÷ 10,400 hrs a year (5 people x 2,040hrs a year) / 60 minutes an hour = $2.25 a minute.
--Total timesaving = 832 minutes or 13.87 hours a day (2 persons), which is time for one additional OR procedure per day.
Total time savings a day x average earning per minute = total cost savings a day: 832 minutes x $2.25 a minute = $1872 a day savings
Cost per device in labor
--Daily savings divided by average number of items (36,000) in a hospital: $1,872 savings a day ÷ 36,000 items in a hospital = 5.2 cents per device a day.
--Total hard labor savings for a hospital per medical item is approximately 2 percent of labor cost in a hospital.
--Field research suggested that there is at least a 5 to 15 percent labor savings.
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Assumptions
--35,000 reoccurring medical instrument turnover in inventory at 1.0 times a year.
--37,000 medical instruments or devices are on hand any given day
--If all the instruments of the hospital were allocated per bed, there would be 10 medical devices +58 instruments = 68 devices per bed.
--Hospital has a network.
RFID Equipment Required
--70,000 passive 13.56 MHz tags, 2,000 active (battery-powered) tags
--Active and passive readers, handhelds and mounted
--Antennas
--RFID middleware
Assumptions for Cost Justification
--10 medical devices average life = 6 years
--10 average number of devices per bed = 10 total devices needed a year per bed x 200 beds= 2,000 required per year
--58 hospital instruments allocated per bed x 300 percent stock on hand= 175 plus one inventory turn of an additional 175 x 200 beds= 70,000 per year. This number includes instruments in other departments.
--Patients room = 16.4 per bed
--OR 240 items x 8 rooms = 1,920 ÷ 200 beds = 9.6 per bed
--Remaining hospital 16 departments x 525 items per depart = 8,400 ÷ 200 beds= 42.0 per bed
--Physio, Bio lab, Ambulatory, Pediatric, Radiology, Cardiology
--Acute Care, Pharmacy, Pathology, Emergency, Oncology,
--Orthopedics, Medical Billing, Facilities Management, Information Systems,
--Patient Administration, Medical Laboratory
Total : 68 per bed
Costs Based on the following Assumptions
Tags
--Assumption: Labor costs = 50 cents a tag
--Tags cost, including labor
2,000 active tags at $12 each = $24,000
+ 35,000 passive tags at 75 cents = $26,250
Total = $50,250
Inventory turn: Annual cost of tag replacement, including labor.
75 cents x 35,000 tags= $26,250
Readers and Antennas
--Readers 300 passive readers at $600 each = $180,000
--Readers 200 active readers at $1,000 each= $200,000
--Antennas: each 1 reader can handle 4 antennas.
--800 antennas at $150 each = $120,000
RFID Physical installs
--Assumption: 10 people for one month at 150 hours each
--RFID Physical install (readers, antennas, wiring): 1,500 hours at $100 an hour = $150,000
Change in Process
--Assumption: $50 is average IS in-house hourly cost and 8 people at --125 hours a month for two months.
--Change in process: 2,000 man hours at $50 an hour = $100,000
System and Hardware Upgrade Cost
--Assumption: Middleware is $30,000; hardware, networking, LAN = $70,000.
--Medical financial, supply, materials management software = $400,000.
--System and hardware upgrade cost for tracking and OR software = $500,000
Training of Staff
--Assumption: $50 an hour x 2 (because a person being trained is while not doing his job while in class); 25 people at 16 hours each.
--Training staff: 400 hours at $100 per hour= $40,000
Total: $1,366,500
--Total cost of an RFID project per item = $1,366,500 ÷ 72,000 devices= total added cost of a device: $18.98
--Total Value of Each Device:$99.35
($90 original cost + $9.35 added value)
--RFID Cost per Device: $98.98
($1,366,500 divided by 72,000)
Difference: $0.37
Justification for the combination of readers and tags
Background information on physics provided by InfoWave Solutions, CEO, Rich McGillicuddy
Cost of Active Tags
One of the big issues with the active tags is the cost. Even at $12 each, the tags are very expensive. The price of these tags is on its way down, to below $10 in the near future. But even at $12 with (0.3 percent shrinkage of tags per day), the daily cost of the tag is $0.04 (estimated battery life of 7 years at a 2.5 chirp rate). If an IV Pump costs $25 per month to lease, the additional $1.50 to make sure that your utilization is high and shrinkage is low, seems like a smaller price to pay
Reader/Antenna Placement
Readers for Passive Tags
At points of consumption or execution, deploy simple tabletop readers that provide visual or audible indicators to let the personnel know that the items have been read. Install a separate set of readers at a chute or conveyor located at inventory areas for quick inventory check-in and department-to-department delivery, and at points of execution where the items needed for the procedure are bubble packed.
Readers for Active Tags
Active tags require readers in or around the ceiling and probably one every room for the coverage area. This area could be the whole hospital or specific floors or departments, depending on how detailed you want coverage. Realize that if you do not cover an entire hospital, once the asset is outside the range of the readers, it appears lost or gone. You would know where and when it left your sight but not much more than that. You can also setup alerts and alarms if items go outside of prescribed areas or go through exits.
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