The Internet of (Very Valuable) Things

Reducing the cost of healthcare one giant leap at a time

Whether we realize it or not, we are past the age of the Internet and well into the age of the Internet of Things (IoT). We’re living in a time when this Internet of Things, the  increased, virtual communication among machines, is completely transforming virtually all facets of life as we know it -- making everything in our lives smarter and more efficient. 

We’re living in a time when 14-year-olds communicate faster than anybody else on the planet, using state-of-the-art smart phones. Scales talk to our phones, and our sneakers tell our watches how many steps we take each day, hour and minute. Parents check their newborn’s breathing, skin temperature and body position with the touch of a smart phone. Smart outlets allow us to turn off any device in our homes from across the street — or across the world. Sensors in trash cans tell municipal services when they need to be emptied. Cars park themselves.

So why, in the face of this remarkable connectivity and data sharing across industries, communities, countries and continents, do clinicians have to waste time straining to read tiny, nearly indecipherable text on medical device labels, just to get expiration dates and serial numbers? Why do they still have to manually scan barcodes off boxes? 

Why are nurses spending time counting products with pen and paper when they could be — and would rather be — caring for patients? 

Why are hospitals stocking supply rooms to the brim with millions of dollars of inventory, some expired, some expiring, and some that will never be used, while a physician can’t be sure the pacemaker he or she needs for a patient procedure today is actually somewhere in that room?

Big problems with a big solution

One thing’s for sure: As hospitals and health networks increasingly move closer to value-based care, there’s simply no more room for this wasted time and money.

The scope of this inefficiency in the medical devices market alone is staggering, leading to an estimated $5 billion[1] in waste annually. Medical devices and implantables, like stents, pacemakers, hips, knees, and grafts, are essential for extending life and improving the quality of life for patients. They are high cost and high value. And, unfortunately, they usually flow through a very inefficient and wasteful supply chain.

That’s a problem not just for healthcare providers and medical device manufacturers, but ultimately for all of us, as patients in the healthcare system.

There are many sources of waste: excess inventory, product loss, products that expire unnecessarily, lost opportunities for charge capture and unnecessary shipping costs (caused by poor inventory tracking and planning), just to name a few. And that’s on top of the even more important patient safety issues associated with this waste — like the risk of expired product implantation, the risk of stock outs, and the inefficient use of valuable clinician time spent on inventory tasks instead of caring for patients.

In a time when all healthcare providers are required to provide higher quality care to an increasing number of patients more cost effectively than ever before, waste must be eliminated. To be eliminated, the supply chain must be properly and holistically managed. And for that to happen, supply chain data — especially when it comes to high-value medical devices — must be collected, aggregated, visualized and acted upon. 

An Internet of Things approach

The good news is that an Internet of Things approach can solve many of the medical device supply chain’s most significant inefficiency problems. It’s an approach built on three pillars:

  1. A cloud platform for data sharing, analysis, visualization and action
  2. User-centric and clinically-minded design and workflows, to ensure ease-of-use and drive compliance
  3. All enabled by highly accurate, advanced RFID tracking technology

Imagine you could place RFID-tagged, high-value medical devices and implantables in an RFID smart cabinet, and model number, serial number, expiration date, cost, and purchase order would automatically show up in the hospital’s inventory profile.

Imagine an RFID smart cabinet performing 20,000 automated inventory counts per year, to near perfect accuracy, without any human involvement, and sending automatic alerts when products are removed, expired, recalled, or out of stock. What if clinical documentation were as easy as waving a product by an RFID reader, so clinicians could stop worrying about inventory and focus more time on their patients?

Imagine that data that can be collected from this Internet of Things, from RFID smart cabinets, point-of-use stations, RFID tagged products, web portals, handheld RFID readers and mobile apps. Imagine that all of that data could be aggregated and analyzed in the procedural department or the operating room, then at the hospital or IDN enterprise level, ready to drive action that saves money and time.

Now, imagine you don’t have to wait — because the future is now. The functionality to make each of these scenarios a reality has been available for years, and we are implementing it right now.

As we speak, hospitals are utilizing automated data collection technology and advanced analytics as a management tool, made possible by RFID. They’re greatly reducing and properly balancing inventory levels to match usage patterns, freeing up valuable capital to be deployed to other patient care priorities. They’re reducing and properly managing product expirations freeing up capital and reducing patient risk. Clinicians have more time to focus purely on patients, resulting in increased patient care and satisfaction. 

Today, the data gleaned from this connectivity is also enabling proper management of consignment, accurate clinical documentation, and product and workflow standardization across entire enterprises. In preparation for bundled payments, systems can understand, manage, and control the true product cost of care.

And inventory management is just the tip of the iceberg when it comes to how the Internet of Things will impact healthcare. It has the potential to pay even bigger dividends in the future.

It can connect patients, caregivers and healthcare providers to data that helps deliver better outcomes outside the “four walls” of the hospital. It can deliver real-time product usage data to help manufacturers improve the way they plan and develop products — and increase the efficiency with which they’re delivered to the point of care. It can arm individual patients with tailor-made strategies to combat illnesses, and with the social technologies they need to take control of their own health.

The time to act is now

As attractive as these scenarios are to most hospital leaders, we’ve only scratched the surface of the efficiency and cost savings the Internet of Things can deliver to healthcare.

Tech savvy and visionary hospitals and health systems are adopting this Internet of Things approach to the way they manage high-value medical devices to reduce costs, improve efficiencies and improve the total cost of care. But more hospitals need to take action now, to take advantage of the connectivity and efficiencies that these technologies have to offer. 

Because of the changes to our healthcare system, we must evaluate and improve the total cost of care.  In this quest, the healthcare supply chain is a strategic asset that can yield large financial savings, and the Internet of Things – the Internet of very valuable Things - is here to transform it and take it into the future. 

Smart scales and self-parking cars are a convenience. Smart inventory management systems for our healthcare system are a necessity.


[1] *PNC Healthcare; GHX quantitative research study (August 2011)

For more information on supply chain innovation and automated technology, check out our Medical Supply Chain Solution Center.


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