RFID in Health Care: a Four-Dimensional Supply Chain

The groundswell of radio frequency identification devices (RFID) in health care may be clouded by the stomping of Wal-Mart, but the biotechnology and pharmaceutical industries are quietly becoming one of the top innovators and users of RFID, and they’ll likely outpace other market segments in the very near future. Stripped of its media hype, RFID is essentially a tracking device. One might wonder what the big deal is. With the never-ending effort of improving patient safety and cutting costs, health care is certainly well-aware of the need to track its every activity. In an industry mandated by federal, state, county and local regulations, tracking is nothing new.

And yet, RFID offers a powerful benefit over other tracking technologies such as bar coding or manual processes. RFID can automatically trace any medical device, pharmaceutical or patient over a given period of time.

Because RFID tags have reading and writing capability, as well as sensors, an RFID-equipped medicine or surgical instrument can indicate in real-time whether the item has been introduced to contaminants, when and where it has moved over time, and environmental conditions, such as temperature and humidity. As such, RFID enables what is called the four-dimensional supply chain.

RFID provides the added benefits of automated tracking, without the need for line of sight, thus eliminating human error and reducing labor. Recent advancements in standards such as the Gen2 ratification by EPCglobal—a major standards body for RFID— provide vast improvements in tag encryption to support anti-counterfeiting.

There are three major areas in health care in which RFID is providing benefit: asset tracking, pharmaceutical traceability and patient safety.

Asset tracking
For more than 60 years, RFID has been used in many industries to track high-value assets. In fact, asset tracking is RFID’s birthplace and in some cases RFID can do what no other technology can. It’s no wonder that hospitals and other health care service facilities that face dauntingly eroding margins are seeking out RFID.

“Hospitals must find ways to cut costs while improving service. Projects must have a tangible return on investment. RFID for asset tracking is an excellent opportunity for both,” says James Williams, partner at Avatar Partners. All hospitals have one thing in common: lots of assets. Beds, biomedical equipment, infusers and wheelchairs are just a few of these. Not knowing where an asset is at any given point in time can cost a hospital a great deal of time and money.

Items that are displaced may be considered lost, and therefore the department reorders the product. If, instead, the item can quickly be found, significant cost is saved through more effective use of assets. Searching for items is a time burden on labor resources, which is ultimately a labor cost as well as a potential service issue.

St Luke’s Episcopal Hospital in Houston is considering a pilot for tracking a portion of its beds. Gene Gretzer, project leader for access technology at St Luke’s, is considering RFID to address the need to increase the efficiency of health care workers. Ultimately, RFID could track all of the hospital’s assets located on its 26 floors. He envisions “one central location where the employee logs in and shows the assets they’re responsible for.” He adds, “Another great benefit for RFID is to track patients.”

The fourth dimension that RFID provides, traceability over time, is especially effective with asset tracking of items that are susceptible to contamination. For example, tags on medical instruments, surgical devices and reusable doctor’s garments, can validate proper cleaning and indicate any contaminants or sterilization concerns before the item is used in surgery.

It’s important to mention that RFID has challenges in environments with metal, water, and electromagnetic frequency: all of which are profuse in hospitals. Gretzer explains that it’s critical the RFID doesn’t interfere with existing systems in the hospital. “We need to make sure [RFID] doesn’t impact our wireless patient system. We need to make sure it works, and ensure the efficiency first.”

Challenges aside, there is great return on investment in asset tracking. Although Gretzer is currently working on getting a small pilot approved, he has high hopes. “If you’re tracking a high dollar value item and are losing $200,000 per year on this equipment, the system could pay for itself within 12 months,” says Gretzer.

Pharmaceutical tracking
Several legislation and industry changes are moving pharmaceuticals into RFID. The FDA identified RFID to be the most promising technology to deter counterfeit drugs. The organization is recommending RFID tagging of item-level drugs that have a high likelihood of counterfeiting by 2006, and calling for all drugs at pallet, case and item level to be tagged by 2007. In October of 2004, the Department of Defense began an initiative to tag all medical supplies and drugs in its supply chain with RFID to ensure global visibility and safety.

The federal government, and some states, mandate “pedigrees,” a process that involves verifying the authenticity and integrity of drug shipments from the wholesale distributor to the retailer. Florida and California are heavily pushing this initiative for immediate implementation in mid-2006 and 2007, and other states are sure to follow. Statewide legislation will undoubtedly require that any pharmaceutical material distributed through the supply chain in the United States have pedigree in place, and this could likely become a worldwide requirement.

“Pedigree requires serialization of medication,” states Deon Nel, RFID engineer for Avatar Partners. “And RFID is the most robust and secure way to ensure serialization.”

Brenda Kelly, vice president of marketing for SupplyScape, a leader in electronic pedigree software, explains, “Pedigree is a supply chain requirement that requires the tracking of the drug from the wholesale distributor, authentication and verification of the places it travels in between, and to the pharmacy that sells the drug.”

Although pedigree is largely a compliance requirement, pharmaceutical companies can establish great business benefit by using RFID throughout the supply chain. In fact, return on investment is as much a reason for RFID as is the pedigree requirement. According to the World Health Organization, 5–8 percent of pharmaceuticals are counterfeit, with worst case scenarios of 25–40 percent in some countries. This costs the pharmaceutical industry about $2 billion per year (HDMA, 2004).

EPCglobal has established that RFID provides particular business value with high-ticket items. Inventory reduction, reconciliation, warehouse automation and reduced out of stock conditions are among the top benefits.

Patient safety
Always the primary driver in health care improvement, RFID can do much to enable fail-proof patient safety. The applications are endless. The U.S. Navy has implemented an RFID patient tracking system in the Pensacola Fleet Hospital in Iraq. The RFID devices help to automatically associate vital information and whereabouts of the patient, saving time and increasing patient safety. In 2004, the FDA cleared a surgical marker known as “SurgiChip,” a tag that identifies the patient with the type of surgery and the doctor.

Similar technology can ensure that the proper medication dosages are given to patients, ensuring the patient’s “5 Rights:” right patient, right drug, right dose, and right route at the right time. At the Pathology Lab of Portsmouth, National Health Service (UK), trials have been conducted to match blood samples to patients, automating the lab results process and greatly reducing errors and administration time.

Bob Celeste of EPCglobal states that the primary driver for RFID in health care has to do with consumer and patient safety. “If you look at the top reasons for considering RFID, they’re patient safety, reducing counterfeit and diversion in the supply chain and brand protection.”

Much research is being done to move RFID into supporting health care requirements. But in an industry bombarded by ever-tightening margins, regulations and liability, RFID, in its capacity to track items and people through the four dimensions, can answer many questions yet unsolved.

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