There has been a lot of talk recently about elevating healthcare operations by operating in a “connected hospital” environment. Think Internet of Things, but exclusively for hospitals.
Reaching this status, where all devices are connected, would represent a milestone of sorts for the healthcare industry by increasing operational efficiencies, improving patient safety, and decreasing costs (for providers and patients).
As it stands now, 25 percent of clinical staff time is spent looking for items, while 10 to 15 percent of staff time in the OR is spent looking for instruments. Additionally, the healthcare industry has a half trillion dollars tied up in inventory, a huge number for any industry.
Recalls further complicate how healthcare facilities work. Medical device product recalls now occur about 15 times a week, and pharmaceutical goods are recalled about 20 times a week in the U.S. RFID can not only help to reduce the amount of inventory held by hospitals, but can greatly aid in managing the recall process.
The bid to bring better efficiencies leads directly to the concept of the connected hospital, where RFID and other technologies enable automated data collection and real time inventory information. By collecting and storing data in a centralized database, and pushing that new-found visibility out to mobile devices, hospitals are able to streamline operations like surgical instrument tracking and compliance while improving inventory visibility.
This is certainly a step in the right direction for combatting the half trillion worth of inventory sitting around in hospitals. A typical hospital carries between 6,000 to 8,000 SKUs, which results in supply chain costs that eat up about 40 percent of a hospital’s operating budget. That number is so high (second only to labor costs) because of the manual process used to count individual items and track inventory. The resulting lack of inventory visibility leads to product obsolescence and product expiration. Those costs have to absorbed by someone, which ultimately drives up the cost of healthcare.
When you think about it, the need for unimpaired inventory visibility is much greater for healthcare than it is in retail, where item level RFID tagging is on the road to becoming ubiquitous. When I walk into a retail store and they don’t have the suit I want in the right color, I have several options, including going to a competing store, or buying it online. Granted, out-of-stocks represent bad retail policy, and retailers are deploying RFID to eliminate them. Other than losing a customer, however, the consequences of a retail out-of-stock are not life threatening.
The same cannot be said in a hospital setting. In healthcare, out-of-stocks are simply not an option. When a team of doctors assembles for a surgical procedure, the required inventory has to be there, especially when it comes to implantable devices or other high-value items. There is no room for error and out-of-stocks in the OR.
This out-of-stock predicament leads to large amounts of inventory being stockpiled throughout hospitals, tucked away in remote closets or even in the truck of a sales rep’s car, all to avoid running out of products when they are needed. So keeping track of what’s on hand and what is about to expire is crucial. In addition, there is very little point-of-use data shared between hospitals and device manufacturers in real time so that inventory can be replenished quickly.
These challenges are driving the need for improved visibility and control of product purchases and the need to better understand the consumption of inventory. Because hospital margins are being squeezed from declining reimbursements, it’s crucial to have accurate charge capture of products used during procedures.
Another reason why operating in a connected hospital environment is so important is the fact that medical researchers continue to make incredible gains in healthcare. However, many of them require new drugs and expensive biologics that often make healthcare even more expensive at administer. The cost of medical innovation, unfortunately, comes with a high price tag.
That’s why it’s even more important than ever to ensure that newly developed drugs are transported and stored per manufacturer instructions. Oftentimes these new drugs carry very specific temperature controls, from ambient that just needs to be monitored, to refrigeration and even frozen up to minus 80 degrees. These are great new products but it is necessary to guarantee that they are stored at the right temperature from the point of manufacture, through distribution and while held at the healthcare provider.
Failure to do so will limit their effectiveness, put patients at risk, and jack up the cost of providing healthcare further. RFID-enabled systems go a long way toward eliminating those risks.
This guest blog was submitted by Joe Pleshek, CEO at Terso Solutions.