Part 2: RFID in Healthcare

Field Research Summary of Comments on Cost Justification
The authors did a field research on the cost justification formula depicted above. The following quotes show a few comments from the people interviewed. Most of them thought that the choice of the OR room was the most difficult to prove the Micro Modular postulate, due to it’s importance as the hospital’s major revenue generating department and they had already addressed that department’s inefficiencies.

“Your numbers for your proof are very reasonable, in some cases very conservative.” —Health Administration Consulting “RFID will increase our labor efficiencies and automatically record our compliance to the new JCAHO Accreditation rulings.” —Rush Bio-Medical Engineering Department “We have never looked at your operation in this manner”. “Thought is was an interesting approach and has merit.” —VP finance of Ingalls Hospital “The presentation may have changed our outlook but not for near term planning”. “It may be something to look at in 18 months.” —Director of Materials Management, Ingalls Hospital

ROI on RFID using Micro-Modular Approach
After determining the RFID benefit value for each object (device), we need to determine the item’s life span, the number of procedures (events) it can be used in and the number of departments that a reusable object encounters. This will result in the item’s true value, and we can then calculate the instrument’s true ROI throughout the entire supply chain of the hospital. The formula and proof will be released in our next paper.

Micro-Modular Field Study: Mobile Aspects
Mobile Aspects of Pittsburgh, Pa., offers a partial example of how cost-effective the Micro-Modular approach is. This company has modular supply cabinets designed for specific hospital department's valuable supplies (such as drug-eluting stents, pacemakers and ortho replacement parts). These cabinets allow access through a touch-screen monitor, giving the user the ability to select a patient, search for items in any cabinet in any location in the hospital, and to view transactions. Once the users have acquired the tagged supply for use, the onboard computer logs the user and the time of the transaction, adjusts the supply inventory level, stores the data for reporting and also bills the appropriate patient for the item. Mobile Aspects reporting software suite will manage inventory and transfer the data through its centralized reporting feature.
Rick Shore, Mobile Aspects' ice president of sales and marketing, concurs with the authors’ findings on ROI. He states: "The client usually sees a payback of our inventory system within a year or less." The modules are priced at $28,000 for the "smart cabinet" and $24,000 for the each of the two additional optional add-on interfaced cabinets.

Key Benefits
Currently, Mobile Aspects has iRIS Supply Systems in Cardiology and Orthopedic operating rooms, as well as cardiology labs in several hospitals.

• Recovery of patient supply charges of lost revenue (5-10 percent)
• Elimination of overstocks
• Identification of items that will be expiring and return or use prior to expiration (“one client lost $100,000 due expired items”)
• Prevention of the accidental use of expired products
• Labor cost savings in staff time
• Inventory tracking and asset visibility without direct line of sight
• Inventory Loss "An average hospital can lose up to eight stents every month at a cost of three thousand dollars a piece". "In one case our iRIS system paid for itself in 3 months." "What is the true value of $100,000 of lost supplies at the going rate of interest"? “This lost typically occurs in conjunction with lost patient billing (charge capture)” says Suneil Mandava Mobile Aspects' President