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A Healthy ROI

Hospitals and other medical facilities that are adopting RFID to track assets, patients and information are improving patient safety and services—and saving money.
By Elizabeth Wasserman
Aug 01, 2007—Three years ago, Brigham and Women's Hospital, a 747-bed nonprofit in Boston affiliated with Harvard Medical School, had a terrible problem with portable medical devices and equipment disappearing from its many wings and units. Each year, the hospital had to replace 100 percent of its 12-lead EKG cables, 36 percent of its temporary cardiac pacers and 9 percent of its telemetry transmitters, among other devices. Equipment losses cost the hospital hundreds of thousands of dollars each year, not to mention the labor costs involved when nurses and other staff members had to hunt for missing devices throughout the 17-story hospital.

Hospital executives realized they needed a better way to track equipment. In 2005, they introduced a real-time indoor positioning solution from Radianse, in which active (battery-powered) RFID tags were applied to the cables, pacers and transmitters. During the yearlong pilot, the hospital lost only two transmitters and two cables. The staff also discovered how some items had disappeared: Cables and pacers got caught in bed sheets and were sent to the laundry, and nurses hid equipment in closets or behind ceiling tiles so it would be on hand when needed.

Medical facilities adopting RFID to track assets, patients and information are not only improving patient safety and services—they're also saving money.
"Hospitals hire clinicians to care for patients. They don't hire people to chase equipment," says Michael Fraai, director of biomedical engineering for Brigham and Women's Hospital. "Through process changes, we realized we could minimize losses."

This year, Brigham and Women's Hospital is expanding its use of RFID hospital-wide, expecting to tag 6,000 medical devices, including $15,000 audible monitors, $10,000 defibrillators and $1,600 pulse oximeter machines. Hospital staff will be able to find devices by accessing nearby computers, where they will get a real-time accounting of every tracked device used in all major care areas.

The hospital expects to save an estimated $300,000 per year—and increase patient and staff satisfaction by allowing staff to spend more time caring for patients. "We expect to see a return on investment within three to four years of when the RFID system is fully operational," says Fraai. The hospital's costs for this project are estimated at less than $1 million. During the pilot phase, the hospital invested $80,000 and saw savings of $66,000 in one year alone.

Many hospitals and medical centers around the world are realizing similar benefits from keeping tabs on expensive equipment, finding quick returns from RFID pilots and full-scale deployments. Unlike some industries, such as consumer product goods and electronics, in which companies have had to RFID-tag goods to meet mandates from Wal-Mart, the U.S. Department of Defense and other organizations, the health-care industry is choosing to deploy RFID on its own. And unlike some companies that have identified how to recoup their investment in RFID technologies but are keeping the results of their deployments close to the vest for competitive reasons, medical facilities have been publicly forthcoming with their RFID success stories (see "Hospitals Share Their RFID Successes").

"The implementation of active RFID solutions in health care or hospitals, more specifically, provides very clear and measurable ROI for the customer," says Josh Slobin, marketing director of AeroScout, a provider of real-time location systems (RTLSs). "No RFID deployment is without its complexities. The hospital environment offers a relatively clear path to deployment and ROI. It's a self-contained environment, and with assets being tracked or, in some cases, patients, there is a clear path through that environment to ROI."

Mounting equipment losses are one of the major drivers in the adoption of RFID in the health-care industry. The global health-care industry spent $20.8 million in 2006 on RFID for asset-tracking and real-time location systems, according to ABI Research. That number is expected to increase nearly eight-fold over the next five years, to $155 million by 2011.

Hospitals and medical centers from Belgium to South Korea are also realizing benefits from tracking patients, to increase patient safety and satisfaction. In addition, medical facilities are using the data gathered from tracking medical equipment, patients and staff to automate a variety of processes, including updating patient records and billing for services.

While health-care facilities are increasingly using closed-loop RFID applications to become more efficient and save money, great inefficiencies currently exist in the open supply chain—which provides hospitals and medical centers with everything from pharmaceuticals to medical equipment, clean gowns and paper products. And that may prove to be a harder problem to fix.
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