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Part 2: RFID in Healthcare

In the second part of this Special Report, authors Brad Sokol and Sapan Shah explain precisely how their "micro-modular" approach delivers a return on investment.
By Bob Violino
Oct 18, 2004Part 1 of this special report on the use of RFID in the healthcare industry explained the Micro-Modular approach to using RFID in healthcare. In Part 2, the authors detail the processes involved in the Micro-Modular approach and how they can create benefits for healthcare providers.

The Flow of Micro-Modular Information
The four-wall micro-modular RFID implementation establishes an item-based structure. The location of any item will be stored along with its “vertical industry standard PML (physical markup language) in the EPC Information Services (EPC IS), network-based applications built on the EPCglobal Network. Because different departments need the item, the item’s location and sterilization history, and the various tasks the item can perform in different procedures, will be maximized through the
procedure-based rules engine (logic for reporting and analysis of data). The hospital’s enterprise applications healthcare compliance manager will schedule each device by performing time and location audits on those devices according to the needs of the hospital, department and procedure. The manager will audit the completed schedule tasks by querying both the EPS-IS for location and the “rules engine” for the availability of the device. An example of this concept is found in Figure 3 above: By following the red dotted line, one can see the true utility (added value) that the device D1 used in the OR Department gains by its reuse through proper scheduling in the Emergency Room department in procedure P2.

The Micro-Modular approach solves the following challenges: supply chain execution; supply chain optimization; supply chain process management; compliance; charge capturing; reimbursement; data integration; and workflow.

Direct Benefits in the Operating Room
Our field and industry research have found these figures are well within the parameters of acceptability.
RFID implementation in a closed-loop healthcare facility will produce the following tangible benefits:
  • Reduction in labor costs
    • Automation of manual actions of paperwork and checklists
    • Improved sequencing of equipment and counts
  • Increase asset visibility
    • Location tracking
  • Better control of inventory
    • Controlling Loss and Theft
    • Better security
  • Increase charge capturing
  • Standardization of supply delivery, selection and usage
  • Increase patient safety -hazard and threat detection
  • Lower Taxes
  • Reduced cost of regulatory compliance

In a November 2001 Healthcare Financial Management Association (HFMA) audio teleconference (“Supply Chain Management for the CFO,” presented by Jamie Kowalski) of 321 executives stated that the total supply chain represents 35 percent to 45 percent of their hospitals total expenses. In that same teleconference, supplies and medical instruments represented 25 percent of the total hospital expense.

Costs incurred per device due to lack of efficiencies in labor are 2 percent to 15 percent per device (see attachments). To reduce these costs one would be required to have:
  • Increased labor efficiencies
  • Defined workflow
  • Automation of manual actions
  • Improved sequence counts
  • Resource utilization

By deploying RFID in the OR, one can easily keep track of all the surgical equipment needed for any procedure and speed up the process by increasing the efficiency of surgical setup and cleanup. These efficiency gains can only be achieved at the Micro device level of each procedure.

Inventory Control
Costs incurred per device due to lack of efficiencies in inventory control are on an average of 5 to 10 percent. To reduce these costs, one would like to keep track of the following:
  • Inventory loss and theft of supplies
  • Elimination of expired items (see 7)
  • Scheduled maintenance for medical devices (see 8)
  • How supplies are used—first in, first out (FIFO) or last in, first out (LIFO)
  • The percentages of disposable supply costs that are not recovered
  • Stock-shortage alerts

RFID can be deployed to track and trace inventory that will almost totally eliminate inventory loss.

About the Authors

Bradley H. Sokol has started three emerging technology companies in a variety of industries. In 1999, he launched Electronic Directory Corp., an interactive, public-access, touch screen mapping directory for hospitals, tourism and commercial building developments. He has consulted in a variety of fields including healthcare coding for medical devices. He can be contacted by sending e-mail to livepress@aol.com.

Sapan Shah is a project leader for RFID at Patni Computer Systems, an India-based systems integrator. Patni’s dedicated RFID practice offers a complete range of RFID services as part of its enterprise application solutions. Sapan is actively involved with the developments of RFID within and outside Patni and regularly contributes to the industry forums. He can be contacted by sending e-mail to sapan.shah@patni.com.

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