CONTRIBUTOR
Jean-Claude Saghbini
healthcare industry expert
I have always been passionate about technology’s ability to transform healthcare, and more specifically, about how “smart” inventory technology can be one of the main drivers of cost reduction in our evolving healthcare space. Reflecting on the changes we’ve seen in the past 20 years, I’m proud at how far we’ve come as an industry with innovations like the use of Radio Frequency Identification (RFID) and even more excited for what’s coming next.
Where we were
Around 2005, when RFID in healthcare was in its infancy, our team (a part of Wavemark, before being acquired by Cardinal Health in 2013) conducted its first RFID installation, at a hospital in New York. At the time, we were excited about the potential cost savings RFID could deliver. But, in retrospect, we were only beginning to realize its potential.
Back then, we weren’t focused on a true healthcare “continuum.” We mostly saw department-level RFID deployments, designed simply to optimize inventory and remove waste. Our first RFID installation, for a single Cath Lab department, was an example of a connected technology that not only showed promise, but delivered incredible results. The success hinted at what we could do on a larger scale.
Today, healthcare is in the midst of a transformation as we face the challenges of evolving market dynamics. Advanced inventory management technology is the foundation upon which we can build a data-enabled and connected supply chain based on real-time data capture. This will be essential for meeting increased demands to reduce operating costs while improving care because it enables Integrated Delivery Networks (IDNs) to automate processes and integrate with multiple data sources, including patient records. The efficiency and savings gains from this connected supply chain promise to free up resources for improved “service at the bedside” and patient satisfaction.
Healthcare market dynamics—2005 and today
Where We Are
Most hospitals are grappling with the same sorts of challenges they faced in 2005…only now they’re even more pronounced. While we’ve seen great strides in technology to improve efficiency, most hospital supply chains are increasingly complex and have to deal with immense waste. And waste is exactly what we need to eliminate if we’re going to improve the overall cost and quality of care.
We see $5 billion in waste every year for high-value medical devices alone, largely because inefficient supply chains allow these devices to expire or go missing.1 And many facilities increasingly need a better way to manage their high-value, low-volume specialty medications.
The waste from inefficient use of clinician time is much more difficult to quantify, but the best estimates, based on studies, tell us that up to 30 percent of clinical resource time is allocated to supply chain activities.2 That’s time that could be much more effectively spent caring for patients. (In a previous post, I discussed how the supply chain optimization affects the bottom line.)
Above all, it’s become much more challenging to manage these realities, as IDNs grow larger, and as we’re increasingly expected to manage the total cost of care.
The Road Forward
Looking at these challenges, it’s clear we need bold new approaches to improving the cost-effectiveness of delivering quality care to patients. Intelligent supply chain technology is essential for managing total costs, and it begins with understanding the value stream from manufacturer to patient.
Crucially, we need solutions that can scale effectively. While improvements on a smaller scale can yield great benefits, significant savings and efficiency come with implementing solutions across departments across an entire health system.
Of course, in an industry with competing priorities, gaining buy-in to invest in any technology can be a challenge. Many supply chain decision makers have better success starting with a technology deployment on a smaller scale, in a single department for example, demonstrating the ROI and then building on that foundation. This can be a very effective approach, but it’s essential to consider scalability and future-proofing at the outset. Otherwise, you could end up overhauling all the initial work down the road.
This is a key reason RFID is set to take the stage as the gold standard for inventory management technology. Barcoding may work well for inexpensive products, but the physical effort required to scan each individual item along with the associated error prone processes can hold back efficiency gains on a larger scale for high value medical devices. RFID on the other hand can capture far more data than barcodes. The extensive automation and data capture that comes with RFID allows much greater value.
If you’re considering investing in RFID technology, make sure you think about the power it has to help along three dimensions of scalability:
Dimension 1: Across an IDN (from department to full IDN)
Dimension 2: Across the supply chain (from manufacturer to patient)
Dimension 3: Across the diversity of high value products
RFID transforms the supply chain into a strategic asset through:
Predictive waste modeling and control
End-to-end information connected and enabled supply chain
Standardized processes across growing provider networks
Enablement of Center of Excellence or Centralized Governance models
Understanding and managing “true” cost per case, so we can receive fair reimbursement for the quality of care we provide
Reduction of variability in how care is provided, across the network, improving consistency and helping to reduce unnecessary costs
RFID's role in the continuum of care
Additionally, because these connected technologies are increasingly cloud-based, they provide the opportunity to aggregate data. Think benchmarking — not just across individual IDNs, but across multiple IDNs and any geography. This means that providers can compare their own metrics — inventory turns, cost per procedure, etc. — metrics from facilities the same size in similar geographies, while keeping each facility’s specific data and identity private. And in doing so, they can identify areas where they can improve, as well as strategies for getting there.
Let’s unlock the value within the healthcare supply chain. These bold solutions are already available — here and now. Connected supply chain technology can marry automated processes, comprehensive data and sophisticated analytics. Together, these advancements are empowering hosptials to make informed decisions leading to increased efficiencies and improvement in care.
If you would like to know more about RFID, contact me at jeanclaude.saghbini@cardinalhealth.com or on Twitter at @Saghbini. You can also learn more about supply chain innovation and automated technology at our Medical Supply Chain Solution Center.