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News on the
cover by Rick Dana Barlow
While RFID hype may be just as pervasive inside the healthcare industry, hospitals have been harder to convince to go beyond simply learning all they can about the technology and actually adopting and implementing it in some capacity in their facilities. Even though they’re eager to digest as much information about RFID as they can hospitals have cited a number of reasons (or excuses) as to why they’re hesitant to take the plunge, ranging from costs to financial and operational disruptions to just plain fear. Still, a small but growing number of facilities indeed have taken the plunge within the last year or two and invested in some real time location system (RTLS) or indoor positioning system technology, of which RFID is one popular type. Other types include infrared and airborne ultrasound. In many cases, healthcare facilities are collecting and analyzing data for a total and reliable cost-benefit analysis that will help them to calculate and determine their return on investment. Individual case studies and initial projects, however, are emerging with some promising administrative, clinical, financial and operational outcomes. As a result, Healthcare Purchasing News Senior Editor Rick Dana Barlow asked key executives at a variety of organizations involved in RFID, ranging from software manufacturers to consulting firms, to offer advice that would help healthcare facilities develop a convincing business case for adopting and implementing RFID, at least in a pilot project. In the first part of this multipart series, RFID and RTLS experts focused on specific actionable steps to take to build an effective argument and determine the key elements needed for a comprehensive cost-benefit analysis. In subsequent parts, RFID and RTLS experts will explore where implementation makes the most sense, initially and ultimately, what materials management’s role should be in the process, as well as what pitfalls to avoid. Our panel of experts includes: • Mike Braatz, vice president, marketing, PanGo Networks, www.pangonetworks.com • Ned Simpson, senior industry specialist, global health solutions practice, Computer Sciences Corp. (CSC), www.csc.com • Rich Schaeffer, CIO and vice president, technology, St. Clair Hospital, www.stclair.org • Andrew McGrath, product
manager, RFID, Manhattan Associates, • Jamie Wyatt, vice president, health industries, Oracle Inc., www.oracle.com • Suneil Mandava, president and CEO, Mobile Aspects Inc., www.mobileaspects.com • Gary York, Ph.D., founder and chairman, Awarix Inc., www.awarix.com • John Wass, CEO, WaveMark, www.wavemark.net • Mark Schmidt, executive vice president, strategic initiatives, Metrologic Instruments Inc., www.metrologic.com • Jeff Schou, director, healthcare industry solutions group, Symbol Technologies, www.symbol.com • Chris Click, vice president, marketing, InnerWireless Inc., www.innerwireless.com • Gabi Daniely, vice president, marketing and product development, AeroScout Inc., www.aeroscout.com • Sam Adams, CEO, St. Croix Systems, www.stcroixsystems.com • Terry Aasen, president
and CEO, Sonitor Technologies Inc.,
______________________________
The good news is that RFID is a powerful, innovative technology. The bad news? Many hospital leaders get caught up in all the bells and whistles associated with this tool and don’t actually tap its vast potential. As a result, hospital leaders often adopt RFID for the sake of adopting RFID. The result? The hospital is then stuck with a technology that is searching for problems to solve. When hospital executives consider RFID, however, they need to first focus on how the technology can solve certain defined business problems. Without doing so, the technology’s potential will never be realized. Location technologies can produce value for hospitals, but the technology must be carefully applied to appropriate business problems. After healthcare leaders have decided exactly what business problems can potentially be solved via RFID applications, then it is time to set realistic goals. Leaders need to ask themselves: What can the technology in its present state of evolution really do now? How can our hospital build a workable solution based on these capabilities? Finally, working with an unbiased, experienced partner can make the difference between a successful project and wasted time and money. In short, an experienced partner can help hospital leaders tie RFID to defined business problems, assess RFID’s current capabilities and then launch a successful RFID initiative. Sam Adams, CEO, Understanding what it is you want to tag and why. What’s the pain and is location-based knowledge going to solve the pain in its entirety? When you think of the need for integration between caregivers and hospital support personnel and the services they deliver (pharmacy, equipment, facility services) will RFID be that catalyst for improved integration and efficiency? What are the existing processes in place today and how might these processes need to be changed to fully leverage RFID? Does it mean shifting resources, decreasing resources, offsetting resource allocation with greater capital investments in technology? While my company, St. Croix Systems, does not OEM RFID technologies, we do work with and integrate to several healthcare-specific providers. Our applications are designed to manage the processes that affect an assets lifecycle and use within the environment of care and includes functionality to manage work orders, resource scheduling, inventory management, contracts management, service and dispatch, safety issue and incident tracking, hazard, alert and recall tracking, hospital and regulatory reporting, and capital planning capabilities. These lifecycle functions enable real-time decision-making based on precise data and asset intelligence. Clients who start with this foundation and then integrate RFID/RTLS solutions are better poised for true asset tracking, getting safe equipment to the right place at the right time, and truly understanding asset inventory. We see RFID as a great extension to a comprehensive asset management solution. Gabi Daniely, vice
president, The most critical step is to understand the problem you’re solving. Spend time with your end users (nurses, materials management, etc.) to document your current processes, where they may be broken, and the impact of those problems (financial and otherwise). This will help you truly understand which issues are driving your business need for RFID, and which are ‘nice-to-have’ solutions – we’ve found that it’s often not the ones customers think. The second step is to analyze your existing IT infrastructure and take stock of what changes will need to take place in order to support RFID – items like cabling, for example, that may not be part of a vendor’s proposal but can contribute tremendously to total cost of ownership. There are ways to help defray these costs, such as using a Wi-Fi-based system that relies on your existing wireless network rather than single-purpose readers.
RFID sensory networks are driving change across many industries and delivering measurable business value. Today, RFID technologies are being applied to diverse use cases within hospitals, including real-time asset tracking, patient tracking and pharmaceutical and supplies tracking. To make an effective business case in a hospital: • Build an ROI model: Every year, hospitals waste millions of dollars buying extra IV pumps, ventilators, portable monitors, wheelchairs and just about anything else on wheels, to ensure that lifesaving equipment is available when and where it’s needed. • Alternatively, hospitals can break the costly cycle of over-procuring and losing equipment by tapping RFID technology. RFID tags are used to constantly emit signals that pinpoint the exact location of critical assets. A clear ROI case can be established by comparing the cost associated with procuring additional biomedical devices (average cost ~ $3,000) versus saving money and time by knowing where critical assets are when they are needed most. • Leverage existing infrastructure: Many hospitals have made a strategic investment in wireless local area network (WLAN) infrastructures to enable remote data access and voice over IP (VoIP). This wireless networking has untethered doctors, nurses and other clinical staff, enabling unprecedented improvements in quality of care. This same WLAN infrastructure is now being used to implement next generation applications, like real-time asset tracking. Standards-based Wi-Fi deployments – with a little tuning or enhancement – are able to locate RFID-based tagged assets, extending the value of an investment in a WLAN infrastructure. • Plan integration with existing systems and solutions: Locating critical hospital assets, staff, patients and supplies is merely the first step in the process. Hospitals must also integrate location data with critical end-user applications, making this information usable for business process improvements, like managing inventory, optimizing workflow and providing exceptional patient care.
When adopting and implementing RFID, hospitals need to take two primary actions: Look at the big picture and make sure the frequency works with existing equipment. When looking at the big picture, hospitals need to take a solid business approach to solving a problem. This involves defining what your greatest pain points are, understanding the business problem that pain causes, defining what those pain points are costing you in dollars or sub-optimal patient care, and researching whether there is a proven RFID solution that will help solve your problem with an acceptable return on investment. Ultimately, the hospital needs to understand the technology – the strengths and weaknesses of the different frequencies, type of tags, and types of readers. On a more specific level, hospitals need to make sure that the frequency is safe to deploy and will not interfere with hospital equipment. This hurdle has caused reservations, especially because competing technologies use the frequency issue as a scare tactic – just as Wi-Fi was negatively hyped in its early days.
Hospitals spend millions of dollars each year on excess medical equipment to compensate for misplaced or lost assets. Hard-to-locate equipment also can delay the healing process because of the time it takes to match valuable medical equipment with the patients who need them. This financial and personnel drain can be remedied with a radio frequency location system (RFLS). RFLS operates on the same principles as RFID, but it takes the technology one step further to provide hospitals with a more comprehensive, real-time solution for locating assets. An important first step is assessing the individual needs of the healthcare facility. Decision makers should establish a team of internal hospital stakeholders and collect relevant data in areas such as equipment utilization, patient safety and workflow improvement. Gaining input from the staff will provide a stronger foundation for the adoption and implementation of RFLS. Second, a team should conduct a preliminary return on investment analysis with forecasted hard and soft benefits to implementing RFLS. By obtaining numbers that support the argument for adopting radio frequency technology, decision makers will help bring the facility’s entire executive team into agreement. An important third step to making a case for this technology is identifying RF solution vendors that can best meet the specific needs of the facility. This means a team should evaluate many vendors for the most flexible, scalable solution. Providing this information to the executive team can make the path to the final decision smoother and quicker. Decision makers should select a vendor that has proficiency in the RF domain and offers professional services that can strengthen the hospital’s resources with specialized RF expertise, while maximizing the value of the investment. Ned Simpson, RFID business cases will be found in a variety of areas and will vary from hospital to hospital. To make an effective business case for RFID in a hospital setting, you need to identify areas and processes that generate a high cost through inefficient asset management. The high cost could include lost revenue or a major safety risk from failure to deliver a necessary item in a timely manor, such as movable medical equipment, implants, surgical specimens and even patients. It is likely hospitals are already committing major expenditures to manage these processes. As each process in targeted, evaluate how RFID or other forms of Auto-ID can improve its effectiveness.
Step 1. Identify the areas where an RFID solution is needed. St. Clair focused on patient safety first. Step 2. Identify the applications that can achieve the desired improvement goals. Step 3. Quantify the savings/benefits of the RFID solutions to justify the project. Step 4. Ensure that the solution fits within your organization’s Enterprise RFID Strategy which should include active and passive tag applications. Step 5. Most importantly, don’t allow indecision on an RFID project to delay an important patient safety initiative such as the reduction of medication errors. Andrew McGrath, Build and educate the RFID team, identify opportunities to leverage the technology and determine financial impact of the project. Build and educate the team. Successful project teams include resources from both inside and outside the organization. Critical input into an effective business case often comes from within an organization. These team members understand the complexities and nuances of the business. Deep knowledge of business processes, combined with a fundamental understanding of RFID technology, allows the team to identify the true business needs as well as drive internal shared ownership of the project. Team members from outside the organization provide insight into how others have leveraged the technology to provide real benefits. Identify opportunities. Build a multi-disciplinary team that provides a comprehensive view of ‘pains’ throughout the Hospital, and not just in logistics or information technology. A team that is comprised of team members from throughout the organization can provide insight into problems that may not be commonly visible. These hidden problems may have solutions that do not have a quantifiable ROI. Instead, the RFID solution may provide improvements in customer satisfaction or security. Determine the financial impact of the project. When executing the costing exercise, include tag, readers, software, maintenance, training, and opportunity cost of internal resources who would otherwise be dedicated to different activities.
The first actionable step in creating an effective business case is to directly align your RFID deployment plans with the strategic needs of the organization. If anything will get RFID projects off the ground, it’s their ability to allow the hospital to more effectively pursue their stated strategies, such as improving financial performance, increasing patient safety and enhancing key service lines. Alignment with the strategies will allow executives to see how this is meaningful to the organization and will allow them to prioritize the project against competing projects based on their strategic relevance. In parallel, it is of paramount importance that the users in the clinical environment understand the RFID plans that are being considered. The users buy-in is required for implementation of any new system or process, and RFID systems are no different. Any RFID system should make the job of daily users much simpler and remove complex, manual, time-consuming steps which remove them from their most important job – care of the patient. Once you’ve aligned with the key strategies, the next step will be to clearly define the specific goals of the project, or stated another way, what problems are to be fixed. In our experience with customers, we commonly see the first goal of their RFID projects being a hard dollar return-on-investment (ROI) in less than 18 months. Typically, the strategy is to enhance financial performance for cardiovascular services, with the specific goals for the project to improve the accuracy of charge capture, lower device expiration costs and lower carrying costs within inventory. As part of evaluating RFID vendors, we are seeing a requirement from hospitals to provide a detailed calculation of how the projects will bring a hard dollar ROI based on their hospital’s operations along with case studies validating the estimates. As final steps in preparing the business case, it’s important to outline the project plan along with project time frames to set the appropriate expectations of when achievement of the goals will occur. Within the project plan would be the identification of a series of measurements, which will not only monitor progress of the project, but also ultimately validate the realization of the expected return on the investment. As already noted, we are seeing a standard time frame for goal realization with the RFID systems as 18 months or less.
Some of the key actionable steps include: • IT infrastructure analysis (network, wireless technologies, staff support requirements) • RFID technology and feasibility analysis of existing structures/facilities • Shrinkage analysis for high value assets/supplies • Security analysis to determine if all egresses can be covered (define the scope of project) • Business process flow analysis and queuing analysis for wait times and patient movement analysis • Patient/physician satisfaction survey analysis • Risk analysis impact for reduced pharmaceutical/patient errors • Determine the particular implementation to pursue
The first step in any process is to understand the nature of the problem. Once identified, take the time to monetize the problem. What is it costing in poor quality outcomes, excessive expense, or lost revenue? This helps to sharpen the focus of the scope and direction of the solution. RFID is well-suited to solving problems associated with expensive inventory and capital equipment as well as high risk, error-prone processes. Pulling the return-on-investment together can be painful and contentious but pays off when it comes to making the business case with your COO and other key hospital leaders.
I would make the case that RFID technology along with a trained staff and a sound set of safety protocols will help a hospital significantly reduce errors in medication administration and treatment as well as supply shrinkage. A recent study concluded one and half million Americans are harmed annually by medication errors occurring in doctor’s offices, nursing homes and pharmacies. In addition to pain and suffering, these errors cost everyone a combined $3.5 billion a year. RFID technology can help a hospital mitigate its risk while improving patient safety. Terry Aasen, president and CEO, Sonitor Technologies Inc. Ensuring that all stakeholder representatives have assessed the improvement potential in their area with respect to a realistic ROI generating performance improvement from an IPS [indoor positioning system] deploy-ment. Whether it is ‘reduced time to search,’ ‘reduced rentals,’ ‘reduced need for equipment replenishment,’ ‘better JCAHO compliance,’ ‘improved patient room turnover,’ ‘improved patient throughput,’ etc., which all represent relevant improvement metrics, it is important to establish baseline performance and projected and measurable post deployment performance data so that the business case be made on these metrics. HPN
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Outside
of the healthcare industry, manufacturers, distributors and retailers
seem to have a more thorough understanding of the promise and pitfalls
of radiofrequency identification (RFID) technology on their
organizations. 
Gary
York, Ph.D., founder and chairman, 
Mike
Braatz, 
Jeff
Schou, director, healthcare industry solutions group, Symbol
Technologies 
Chris
Click, 
Rich
Schaeffer, CIO and vice president, technology, 
Suneil
Mandava, president and CEO, Mobile Aspects Inc.
Jamie
Wyatt, 
John
Wass, CEO, WaveMark 
Mark
Schmidt, executive vice president, stra- tegic initiatives, Metrologic
