RFID in healthcare
A panacea for the regulations and issues affecting the industry?
by James Reiner and Mike Sullivan
UPS Supply Chain Solutions Consulting Services
Patients at a hospital in
England were exposed to the human version of mad cow disease when
infected equipment was used. Human error caused patients at the hospital
to be exposed to the infected equipment. How can healthcare
organizations avoid catastrophic situations like this?
1
Proper protocols and the
use of radio frequency identification (RFID) technology could prevent
such outbreaks by ensuring instruments are properly tracked and
classified. RFID is now generating significant interest in the
marketplace because of its robust application capabilities. RFID enables
healthcare facilities to improve overall safety and operational
efficiency because it operates without line-of-sight while providing
read/write capabilities for dynamic item tracking.
Why RFID adoption has been slow
For a variety of reasons, adoption of
RFID technology by the healthcare industry has been sluggish because
payback is less immediately visible than what most companies prefer.
Although costs are decreasing, many companies are reluctant to invest in
a technology not yet widely adopted.
Maximizing RFID benefits
also requires modifying existing business processes, a daunting task
that usually entails changes in technology investment strategies.
Without clear RFID standards and data ownership policies, investment in
RFID has been a difficult proposition.
Compelling developments
However, recent developments have made
RFID applications more compelling.
1) RFID costs are
expected to decline significantly. RFID tags costs dropped from $1 in
2000 to 20 cents in 2004, and are expected to fall to 5 cents by 2006.
In 2004, readers cost about $1,000 but are expected to fall to only $200
by 2006.
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2) Coupling RFID
technology with the electronic product code (EPC) will provide the
capability to locate and track items throughout the supply chain,
allowing significantly more data to be attached to items at the pallet
and case level. EPC Global, a subsidiary of the Uniform Code Council (UCC),
is leading the development of industry-driven standards for the EPC
Network to support the use of RFID in today’s fast-moving, information
rich trading networks. EPC Global and EAN International are writing
specifications on the content for 96-bit EPC tags. EAN International is
the global not-for-profit organization that creates, develops and
manages the EAN-UCC standards jointly with the UCC, one of its member
organizations.
3) New regulatory
requirements such as the Florida Pedigree Act mandate that important
information accompany each drug throughout the supply chain. Using RFID
will allow healthcare companies to capture required information such as
drug name, dosage, container size, number of containers, lot/control
numbers, etc.
4) Tampered or
adulterated products entering the healthcare supply chain is a growing
concern. In light of the 9-11 terrorist attacks and the anthrax-tainted
mail found in the United States, both consumers and manufacturers are
looking for ways to keep drugs safe.
Overall, healthcare
companies need the types of solutions that RFID can provide. Numerous
RFID applications for both hospitals and pharmaceutical companies can
benefit customers and patients.
Healthcare marketplace needs and RFID solutions
Pharmaceutical applications
Drug counterfeiting
Pharmaceutical companies, distributors, and hospitals need technology to
deter drug counterfeiting. The World Health Organization estimates that
between 5 to 8 percent of global pharmaceuticals are counterfeit. In
some countries, the percentage of counterfeit drugs is significantly
higher at between 25 to 40 percent. Thus, the pharmaceutical industry
reports that it loses $2 billion per year due to counterfeit drugs.3
Counterfeit drugs
adversely affect people’s lives by preventing patients from receiving
needed medication. Fortunately, RFID/EPC tags can help detect products
that are:
• Counterfeit or fake
• Tampered with,
adulterated or substituted
• Unacceptable (i.e.,
expired, discarded, returned, recalled, etc.)
4
Clinical trials
The pharmaceutical drug approval process is rigorous and dependent on
meticulous documentation. As new drugs go through the clinical trial
phase, accurately tracking patient usage is crucial. RFID technology can
improve the tracking of drug usage throughout the clinical-phase testing
protocols. Improved tracking and accountability can improve the
reliability and speed of the United States Food and Drug Administration
(FDA) drug approval process.
Inventory management
Manufacturers and distributors need improved visibility throughout the
supply chain to gain an accurate account of inventory. Lack of
visibility of customer orders results in increased inventory because
healthcare practitioners often keep buffer stocks to avoid stock outs.
Increased inventory visibility could reduce buffer stocks by
substituting knowledge for inventory, thereby reducing total inventory
costs.
Hospital and medical device company applications
Medical device and asset tracking
RFID has strong application potential with medical device companies. The
FDA requires medical device companies to be able to identify each unit
by serial number. Medical device companies need better control of
implants on consignment with hospitals because returns can occur more
than 50 percent of the time. RFID technology that improves visibility
into returns could enable faster redeployment since the company would
know sooner when an unused product could be returned.
Surgical instruments and
other devices must be properly cleaned and packaged between uses. Tags
on the instruments and readers on the sterilization chambers and storage
cabinets can validate proper cleaning and help locate needed
instruments. Since medical devices are often mounted on portable carts,
smart tags placed on the devices and readers installed in the doorways
can enable personnel to quickly locate a crucial piece of equipment and
immediately determine its fitness for use.
Similarly, catastrophic
errors would be completely traceable from manufacture to use, and
preventative maintenance on equipment could be more accurately tracked.
Patient tracking
Patient identification and location assistance are often needed to
ensure patient safety when urgent medical attention is needed. Patient
tags with RFID chips will meet this need.
Product tracking
Hospitals currently have to track radioactive isotopes throughout the
facility from storage to transport and then from administration to
disposal. RFID tags and readers can automate these tasks thereby saving
time and resources.
Active RFID tags with
read/write capabilities can be used to detect seal integrity for
containers and individual packages. The tag can record the time and
duration of seal loss, allowing even problems that occur mid-shipment to
be detected.
Inventory management
Large amounts of inventory typically can be found in hospital operating
rooms. Lack of visibility in the supply chain coupled with the
unauthorized purchase of certain items often results in the
proliferation of "unofficial" inventory that could be reduced by
properly managing the materiel ordering process. RFID technology can
provide an accurate account of both official and unofficial inventory
levels. Proper diagnosis of the problem will drive the implementation of
corrective solutions.
Following the example of
leading retailers, hospitals could move to the next generation of supply
chain management by having their suppliers manage product ordering and
inventory levels. Hospital suppliers would then be responsible for
providing product on a timely basis through RFID technology. A dramatic
shift in how hospital supplies are ordered could drive down hospital
inventory levels assuming the proper processes and metrics are in place.
Barriers to RFID adoption
Key barriers to RFID adoption stem from
previously high technology costs. Payback periods have typically been
too long. Companies are waiting for RFID technology to drop in price,
thus making it a more affordable investment. Lean information technology
budgets mean that new technologies need to demonstrate compelling
business cases and short paybacks on investments. Companies are
skeptical if the costs cannot be offset by the promised benefits.
Realizing the full
benefits of the technology will require companies to make changes in
their business processes. For example, tagging medical devices and
placing readers in doorways at hospitals will require an initial
deployment and a change in protocols for locating assets. While the
initial training will require coordination and effort, the decrease in
time spent looking for assets and increased asset utilization will
improve the overall efficiency of the hospital.
An additional barrier to
RFID technology investment stems from the view that applicable standards
are lacking. EPC Global, however, is working to create the EPC which
will provide significantly more data capabilities for the 96-bit EPC
tags. The EPC will enable more information to be captured than the
current Universal Product Code (UPC) which can only contain 12 bits of
information. The EPC will enable more salient and detailed information
to be captured for a product down to the item level. The tag can then be
programmed to hold information such as an item’s serial number, size,
manufacture date, price, and its distribution touch points, thus
enabling greater product accountability and safety.
RFID decision factors
Pharmaceutical industry leaders such as
Pfizer, CVS/pharmacy, Abbott Laboratories, Cardinal Health, Johnson &
Johnson, and McKesson are studying the safety and security of the
pharmaceutical supply chain. They are also interested in knowing how to
improve returns management and increasing the efficiency of distribution
operations.
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The adoption of RFID
technology in the pharmaceutical industry depends on the creation of
open standards, FDA approval, packaging redesign, and technology
validation. Freeing up enough capital for investment in RFID/EPC
technology can occur if in-house consolidation across servers, networks
and data storage occurs.
Many companies are also
waiting for RFID technology prices to drop and for case studies that
strongly illustrate the benefits of RFID in business operations. As the
RFID technology prices decline and applications become more robust, RFID
technology will be increasingly adopted.
Mandates
Retail companies are leading RFID adopters. Wal-Mart, for example, has
mandated their top 100 suppliers to adopt RFID technology, enabling
increased inventory visibility and management. Similarly, Target has
required its suppliers to use RFID technology at the pallet and case
levels for some of its regional distribution centers by 2005. Target
then expects the rest of its suppliers to adopt RFID by 2007.5 The
Department of Defense has also mandated that its top 100 suppliers
utilize RFID technology.
While mandates for
utilizing RFID technology are occurring, the ultimate responsibility for
adopting RFID will depend upon a company’s ability to develop a
compelling business case and effectively pilot RFID applications.
Companies will have to
weigh a host of considerations before deciding to invest in RFID
technology. Considerations to balance will include tag readability, tag
price points, system integration costs, hardware and setup costs,
management, ownership and sharing of data, business process changes,
privacy concerns, and standards, i.e., EPC vs. the International
Organization of Standards (ISO), a nongovernmental network of the
national standards institutes of 148 countries.
Companies will be looking
for favorable payback periods because competing priorities for financial
expenditures warrant careful consideration before investing in new
technology applications.
RFID and bar coding
While the bar code is widely accepted in the marketplace, RFID offers
some distinct benefits:
• No "line of sight"
requirements
• More automated reading
• Less labor required
• Improved read rates
• Larger data capacity
• Ability to "write"
information
on a tag
• Effectiveness in harsh
environments (e.g., temperature extremes, dusty and dirty conditions)
Companies will have to
consider the cost of either implementing RFID as a way to augment bar
coding or to replace it. Bar coding, however, is a mature and proven
technology that works well in numerous applications such as inventory
management. Adopting RFID requires careful analysis to demonstrate that
the incremental advantages significantly outweigh the benefits derived
from bar code technology.
Organizations and associations supporting RFID
Although the FDA has not yet mandated RFID adoption, it has recommended
tagging of unit-level drugs that are likely to be counterfeited by 2006
and has called for the tagging of all drugs at the pallet, case and unit
levels by 2007.5 The Healthcare Distribution Management Association (HDMA),
a non-profit organization for distributors of pharmaceutical drugs, also
issued a position statement in November 2003 recommending that
pharmaceutical manufacturers and wholesalers begin putting RFID tags
with EPC on cases in 2005 and deploy the infrastructure needed to take
advantage of those tags. The recommendation also included the
incorporation of EPC tags at the selling unit level by 2007.
AdvaMed, an advanced
medical technology association, supports the use of automatic
identification for medical devices on a voluntary basis. AdvaMed also
recommends that reprocessed or refurbished items should be treated no
differently than other medical devices. AdvaMed believes it is up to
manufacturers to apply automatic identification to items where it makes
sense economically and technically.6
Clearly, organizations
and associations support RFID technology as a means for addressing
product safety and accountability. However, companies that adopt the new
technology will have to carefully update their internal processes and
protocols to take advantage of the benefits that can be realized from
RFID.
Case studies
Companies are currently using RFID technology in the healthcare industry
as a way to enhance patient safety and improve inventory management
capabilities. For example, the United States Navy replaced a
labor-intensive, manual patient location system in Pensacola Fleet
Hospital in Iraq with an RFID system. Hospital personnel are using RFID-enabled
wrist bands to identify, locate, and obtain status updates on their
patients. According to Hospital Corpsman Chief Petty Officer Michael
Stiney, U.S. Navy, "The ability to keep important information with each
patient, and to track his or her whereabouts automatically have helped
medical professionals at this facility better manage patient care."
7
RFID is often used on
patient wristbands to provide accurate identification and maintain the
safety of newborn infants. Alzheimer facilities have RFID readers
installed at doors to help determine patients’ locations and maintain
their safety should they enter unauthorized areas.
6
Three Virginia hospitals
operated by Bon Secours Richmond Health System will use an RFID network
in each hospital to determine the exact location of tagged medical
equipment and mobile assets. The RFID network will enable each hospital
to determine if an item is in use, available, or if it needs servicing.
Approximately 10,000 pieces of equipment will be handled by the
inventory management system.
9
Another application for
RFID tags exists in prescription bottles used by blind or
visually-impaired individuals. Patients can use devices placed on
prescription containers to "read" the prescriptions and learn dosage
amounts verbally through the use of speech conversion technology.
10
A reliable and
cost-effective packaging solution for medication tracking exists in
using RFID technology to record patient usage when the tablet is
expelled from the packaging, enabling accurate capture of clinical data
without manual data entry.
11
In summary
Although healthcare
companies are slowly adopting RFID, usage is expected to accelerate when
RFID technology prices drop and companies become more confident of the
applications. RFID’s strong functionality can improve a company’s
operational efficiency by reducing labor and enhancing product
visibility, thus reducing overall inventory levels.
FDA and HDMA
recommendations for tagging drugs in the next few years should have a
ripple effect on the pharmaceutical industry. Patient safety and product
tracking requirements will necessitate the adoption of RFID technology.
Accounting for drugs’ authenticity and status (e.g., expired, discarded,
recalled) will be accomplished through RFID/EPC tags that meet
identification and anti-counterfeit requirements. Thus, pharmaceutical
companies will continue to study RFID technology and discover that the
applications warrant capital investment supported by strong business
cases.
Hospitals already have
strong RFID applications which include asset and medical device tracking
to promote patient safety and increase operational efficiency. In
addition, some hospitals that have not yet adopted bar code technology
can use RFID technology to leapfrog their competition in maintaining
better asset visibility while reducing inventory levels.
Thus, RFID is very
promising for the healthcare industry assuming that healthcare companies
can adjust their processes to leverage RFID’s advantages. Healthcare
companies, however, will have to create their own business cases to
determine if the payback is justified. More companies are projected to
begin piloting RFID/EPC technologies in an attempt to gain competitive
advantage. The healthcare industry will benefit from the efficiencies
that RFID provides which can translate into an overall healthier
industry. HPN
For more information
contact: James Reiner at jreiner@ups-scs.com, or Mike Sullivan, at
msullivan@ups-scs.com. UPS Supply Chain Solutions Consulting Services
678.746.4100 www.ups-consulting.com
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2002.
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Tracks Wounded in Iraq With ScenPro’s TacMedCS Program Using RFID
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