RFID In Health Care In 2005 by Jim Bloedau

Copywrited Information Advantage Group Copywrited Information Advantage Group ( http://www.iagllc.biz ). All rights reserve( http://www.iagllc.biz ). All rights reserved.d.

RFID in Health CareRFID in Health Care

An Executive Briefing An Executive Briefing

forfor

Your Company Your Company Go ToGo To

www.iagllc.bizwww.iagllc.biz(This copy for promotional purposes only)(This copy for promotional purposes only)


ObjectivesObjectives

What Is RFID?What Is RFID? Current TrendsCurrent Trends Strongest DriversStrongest Drivers Shared, Technical & Enterprise Shared, Technical & Enterprise

ConcernsConcerns Legal ConcernsLegal Concerns CostsCosts ROIROI Building Business CaseBuilding Business Case A Word About VendorsA Word About Vendors Developing StrategyDeveloping Strategy


What Is RFIDWhat Is RFID

What Is RFID ?What Is RFID ?Radio Frequency IDentificationRadio Frequency IDentification


What Is RFID ?What Is RFID ?

RFID is another RFID is another form of automatic form of automatic identification and identification and data collection data collection (AIDC) (AIDC) technology. technology.

Included in this Included in this “Auto-ID” “Auto-ID” grouping are:grouping are:– bar codesbar codes– magnetic stripe magnetic stripe

cardscards– optical character optical character

recognition (OCR)recognition (OCR)– biometricsbiometrics


TagsTags

Passive TagPassive Tag– No power sourceNo power source– Unlimited life spanUnlimited life span– 3 - 10 feet3 - 10 feet– Cheap / many Cheap / many

applicationsapplications

Semi-Passive TagSemi-Passive Tag– Power sourcePower source– More data StorageMore data Storage– A bit more rangeA bit more range

Active TagActive Tag– Internal power Internal power – Continuous Continuous

transmission transmission – 3-5 years power life 3-5 years power life – Read/Write Read/Write – 300 feet indoors; 1000 300 feet indoors; 1000

feet outdoorsfeet outdoors– Large data storageLarge data storage


RFID - Healthcare FrequenciesRFID - Healthcare Frequencies

Worldwide: 8 common RFID Frequencies

10 KHz 100 KHz 1 MHz 10 MHz 100 MHz 1000 MHz 300 GHz

Low Freq. EAS Mid. Freq.EAS

Cell Phone

RFID: Item/Asset

DataModem AM

RadioToys

GarageDoorCB FM

RFID:Security

I.D.Access Control

RFID:Asset & Item

MicrowaveEAS

TV

DataTerminal

RFID &I.C. Cards

2.45 GHz

125/133 KHz 13.56 MHz 868-915 MHz 2.45 GHz

CordlessPhone


ReadersReaders

““Talks” to RFID TAGTalks” to RFID TAG– Pulses or continuous transmissionPulses or continuous transmission

Reading stored dataReading stored data Updating Updating Task specific application.Task specific application.

Hand-held Hand-held Mounted in arraysMounted in arrays


SystemSystem

System software collects data System software collects data from the reader system and from the reader system and applies tools to make it into applies tools to make it into useable information. useable information.


Bar Code vs RFIDBar Code vs RFID

No line of sight requiredNo line of sight required Simultaneous readsSimultaneous reads 30x more data storage30x more data storage Read - WriteRead - Write Hard to copyHard to copy ReprogrammableReprogrammable Track for lifeTrack for life encryptionencryption

• Low Cost ($.003)• Widespread utilization• Mature• Visual label backup

• Line of sight required/single Line of sight required/single readread

• Subject to simple damage• Not a tracking device• Easily replicated• Small storage (44bit)

Bar Code

Costs - dropping rapidlyCosts - dropping rapidly Maturing rapidlyMaturing rapidly Subject to environment, at timesSubject to environment, at times Scalability questionsScalability questions

RFID

GOODGOOD

BADBAD


HistoryHistory

HistoryHistory


HistoryHistory

1940s - British used 1940s - British used during World War II during World War II to differentiate to differentiate returning English returning English airplanes from airplanes from inbound German inbound German ones. ones.

1960s RFID tag 1960s RFID tag developed - developed - essentially a essentially a microchip.microchip.– Until the late 1990s it Until the late 1990s it

was essentially a was essentially a technology waiting for technology waiting for an infrastructure.an infrastructure.

1999 - Massachusetts 1999 - Massachusetts Institute of Institute of Technology Auto-ID Technology Auto-ID Center in 1999 began Center in 1999 began promoting RFID as a promoting RFID as a replacement for the replacement for the common bar code. common bar code.


Recent HistoryRecent History

2003 - 10 percent of 2003 - 10 percent of Global 2000 had Global 2000 had engaged in early engaged in early RFID pilots.RFID pilots.

– 50% written off50% written off– Rest yielded Rest yielded

indifferent results.indifferent results.

2003-04: “Wal-Mart 2003-04: “Wal-Mart Effect”Effect”

– Mandates: Wal-Mart, Mandates: Wal-Mart, Target, DODTarget, DOD

– Promise to save $8 Promise to save $8 billion by 2006billion by 2006

Early Results 2004Early Results 2004

– 8% of 50 companies 8% of 50 companies polled in 2004 claimed polled in 2004 claimed to be very or to be very or somewhat satisfied somewhat satisfied with their RFID with their RFID programs.programs.

– 20% said they were 20% said they were somewhat or somewhat or completely completely dissatisfied. dissatisfied.

– Viewed as “…a Viewed as “…a revolutionary revolutionary technology … technology … important to their important to their organization’s organization’s business strategy.”business strategy.”

– 50% of 30 50% of 30 manufacturers - manufacturers - "expect high returns "expect high returns on RFID investments.“on RFID investments.“


2005 Trends2005 Trends

Early TrendsEarly Trends



Most Fortune 100 targeted Most Fortune 100 targeted high impact - logistics and high impact - logistics and distributiondistribution



Most Fortune Most Fortune 100 targeted 100 targeted high impact - high impact - logistics and logistics and distributiondistribution

– Down to pallets Down to pallets and boxesand boxes

– Item level RFID Item level RFID still nascentstill nascent



Non-healthcare industries Non-healthcare industries were aggressively executing were aggressively executing trials and roll-outs:trials and roll-outs:



Non-healthcare Non-healthcare industries were industries were aggressively aggressively executing trials executing trials and roll-outs:and roll-outs:– A majority (69%) A majority (69%)

are currently in are currently in the discovery the discovery stage.stage.

58% - trial/test 58% - trial/test stage mid 2005.stage mid 2005.

46% - pilot by 46% - pilot by mid 2005. mid 2005.

51% - projects 51% - projects fully deployed by fully deployed by June, 2006.June, 2006.

Short Term:Short Term:

– Companies planned Companies planned on deploying real-on deploying real-time location time location systems, supply systems, supply chain, and asset chain, and asset management management applications. applications.

Long Term: Long Term:

– Beyond 12 months, Beyond 12 months, companies planned companies planned to use RFID for to use RFID for smart shelving in smart shelving in pharmaceutical and pharmaceutical and retail, and mobile-retail, and mobile-commerce.commerce.



Investment in RFID was centered Investment in RFID was centered on developing infrastructure:on developing infrastructure:



Investment in Investment in RFID is RFID is centered on centered on developing developing infrastructure:infrastructure:

– RFID budgets RFID budgets averaged over $500K averaged over $500K in 2005in 2005

Mainstream adoption Mainstream adoption thought to begin in thought to begin in 2008.2008.

– RFID investments will RFID investments will be spread fairly be spread fairly evenly on:evenly on:

HardwareHardware DevelopmentDevelopment InfrastructureInfrastructure IntegrationIntegration

– Beyond 2005:Beyond 2005:

Companies will allocate Companies will allocate slightly more of their slightly more of their RFID investment toward RFID investment toward hardware and hardware and development. development.



A major shift toward A major shift toward enterprise RFID computing enterprise RFID computing began in 2005.began in 2005.



A major shift A major shift toward toward enterprise enterprise RFID RFID computing computing began in began in 2005.2005.

Until the Until the beginning of 2005:beginning of 2005:

– Most vendors niche Most vendors niche or large electronics or large electronics manufactures manufactures filling a niche.filling a niche.

Spring 2005: The Spring 2005: The “IBM Effect”“IBM Effect”

– Business-Business-intelligenceintelligence

– AnalyticsAnalytics

– Data-warehouseData-warehouse



MiddelwareMiddelware– Business-intelligence/analytics/data-Business-intelligence/analytics/data-

warehouse markets have either warehouse markets have either released or are about to release released or are about to release software packages that will help software packages that will help companies cope with all this RFID companies cope with all this RFID data data



Costs are Costs are expected to expected to come down come down fast.fast.

– Estimates were that Estimates were that tag purchases will tag purchases will grow from 323 million grow from 323 million units in 2002 to 1.62 units in 2002 to 1.62 billion in 2008.billion in 2008.

– This predicted growth This predicted growth had RFID had RFID manufacturers manufacturers accelerating their accelerating their production efforts to production efforts to drive down tag and drive down tag and reader costs. reader costs.

– The most frequently The most frequently used passive tags used passive tags were approaching the were approaching the $.10 goal.$.10 goal.



– The 100 Most Wired The 100 Most Wired Hospitals are renewing Hospitals are renewing their emphasis on their emphasis on managerial systems managerial systems that support financial, that support financial, human resources and human resources and materials materials management management functions. functions.

The data show a The data show a reversal of a one-year reversal of a one-year decline in growth in decline in growth in management management systems.systems.

– IT-powered IT-powered automated supply automated supply chain management chain management tools, such as tools, such as point-of-use point-of-use supply systems:supply systems:

Minimize stock Minimize stock shortagesshortages. .

Reduce inventory Reduce inventory costscosts

Pass expiration Pass expiration dates before dates before being used.being used.



Founding bar Founding bar code companies code companies were offering were offering RFID:RFID:

– A vendor (50 yrs.) A vendor (50 yrs.) providing bar code providing bar code products to hospitals products to hospitals since 1988. since 1988.

RFID wristbands in RFID wristbands in 20002000

Convergence & Convergence & Modularization:Modularization:

– A vendor has merged A vendor has merged three new asset and three new asset and patient tracking patient tracking products with their products with their RFID Inventory RFID Inventory System.System.

Outsourcing:Outsourcing:

– Handle the Handle the management, management, archiving, filtering, archiving, filtering, and integration of and integration of RFID data, are RFID data, are emerging.emerging.

Similar to catalog Similar to catalog data ordata or electronic electronic data interchange data interchange (EDI).(EDI).


DriversDrivers

HealthcareHealthcare

RFID DriversRFID Drivers


DriversDrivers

Benefits of real-time efficiencies Benefits of real-time efficiencies are driving expectations.are driving expectations.


Early DriversEarly Drivers

Benefits of real-time efficiencies Benefits of real-time efficiencies are driving expectations:are driving expectations:

– Business DriversBusiness Drivers:: Reduction of labor costsReduction of labor costs More efficient business processesMore efficient business processes Tighter connection with business Tighter connection with business

partners and suppliers.partners and suppliers.

– Technology Drivers:Technology Drivers: Improve accuracy of dataImprove accuracy of data Increase automationIncrease automation Provide real-time inventory Provide real-time inventory

capabilitiescapabilities


Early DriversEarly Drivers

““The FDA Effect” The FDA Effect” – Up to 7% or more of all Up to 7% or more of all

drugs in the drugs in the international supply international supply chain may be chain may be counterfeit. counterfeit.

In some countries, it In some countries, it may be 25% to 40%.may be 25% to 40%.

– $2 billion in product $2 billion in product returns each year returns each year caused by overstocked caused by overstocked or outdated products. or outdated products.

– 1,300 recalls in 2001 1,300 recalls in 2001 alone.alone.

– February, 2004 a February, 2004 a final rule requiring final rule requiring bar codes on bar codes on hospital-hospital-administered drugs, administered drugs, biological, and blood biological, and blood productsproducts.. (FDA (FDA 21 CFR Parts 21 CFR Parts 201, 606, and 610)201, 606, and 610)

– Later, ambitious Later, ambitious timeline for drug timeline for drug manufacturers and manufacturers and distributors to test distributors to test RFIDRFID

“…“…the most promising the most promising approach for reliably approach for reliably tracking, tracing, and tracking, tracing, and authenticating authenticating pharmaceutical products.”pharmaceutical products.”

– Recommending Recommending widespread use of widespread use of RFID in RFID in pharmaceutical pharmaceutical supply chain at the supply chain at the item level by 2007.item level by 2007.


Early HC DriversEarly HC Drivers

JCAHOJCAHO– April, 2004 proposed hospitals April, 2004 proposed hospitals

use bar codes for medication use bar codes for medication management at the bedside by management at the bedside by 2007. 2007.

– ““Shared Visions–New Pathways” Shared Visions–New Pathways” - to remain an accredited - to remain an accredited healthcare facility, must show healthcare facility, must show high priority for life support high priority for life support equipment.equipment.


Early HC DriversEarly HC Drivers

Mandated Mandated Tracking and Tracking and Reporting:Reporting:– Healthcare industry is Healthcare industry is

constantly moving constantly moving toward uniformity of toward uniformity of reporting:reporting:

HIPAA, Sarbanes-Oxley, HIPAA, Sarbanes-Oxley, OSHAOSHA

Tracking and safety approval Tracking and safety approval (FDA, 21CFR Part 11 (FDA, 21CFR Part 11 compliance)compliance)

Labeling compliance: Health Labeling compliance: Health Industry Bar Code (HIBC)Industry Bar Code (HIBC)

Health Industry Distributors Health Industry Distributors Association (HIDA)Association (HIDA)

Good Manufacturing Practice Good Manufacturing Practice Regulations (GMP)Regulations (GMP)

International Organization International Organization for Standards (ISO 900 for Standards (ISO 900 requirements).requirements).

The same plumbing The same plumbing that will share RFID that will share RFID data across the data across the business chain can business chain can also support future also support future reporting and reporting and compliance projects.compliance projects.

Standards creation Standards creation activities shows activities shows industry’s industry’s commitment to commitment to meeting the meeting the challenge.challenge.


Shared ConcernsShared Concerns




More than More than 50% of 50% of interviewed interviewed experts named experts named funding, costs, funding, costs, immature immature technology technology and workflow and workflow integration as integration as major barriers. major barriers.

- Costs included the price - Costs included the price of RFID tags, readers and of RFID tags, readers and applications, as well as the applications, as well as the wireless infrastructure and wireless infrastructure and systems rework and systems rework and integration.integration.

- Reluctance to invest in a - Reluctance to invest in a technology not yet widely technology not yet widely adopted.adopted.


Technical ConcernsTechnical Concerns




46% - Integration/installation46% - Integration/installation 43% - cost of tags and readers43% - cost of tags and readers 38% - obsolescence as 38% - obsolescence as

standards/application evolvestandards/application evolve 21% - Tags 21% - Tags 18% - Software 18% - Software 12% - Database-driven hardware12% - Database-driven hardware 2 - Readers2 - Readers



Network infrastructure was the most Network infrastructure was the most commonly named barrier to commonly named barrier to deployment.deployment.

92% of the 100 hospital repondents92% of the 100 hospital repondents

HCOs want to be able to use existing HCOs want to be able to use existing wireless networks rather than a wireless networks rather than a dedicated RFID network for tracking.dedicated RFID network for tracking.– That makes the network more valuable, That makes the network more valuable,

but also more susceptible. but also more susceptible. HCOs worry that tracking thousands of HCOs worry that tracking thousands of

items could overwhelm the network. That items could overwhelm the network. That could mean that clinicians are unable to could mean that clinicians are unable to access or enter patient data.access or enter patient data.



ReliabilityReliability– Field Nulls – “holes in the field”Field Nulls – “holes in the field”

HF – “Tight Fishnet” HF – “Tight Fishnet” – Better for liquidsBetter for liquids– 96 bits up to 8 K96 bits up to 8 K

UHF – “Swiss cheese”UHF – “Swiss cheese”– Low storage capacityLow storage capacity

– Liquids and Metals Liquids and Metals HF signals are better able to penetrate HF signals are better able to penetrate

water and other liquids because the water and other liquids because the longer wavelengths - less susceptible to longer wavelengths - less susceptible to absorption absorption



Infrastructure – Scalability Infrastructure – Scalability and Operational Supportand Operational Support – Network and End-User Device Network and End-User Device

ManagementManagement– Sensor Management (a new Sensor Management (a new

category for many IT organizations)category for many IT organizations)– Data ManagementData Management– System IntegrationSystem Integration


Industry StandardsIndustry Standards EPC GlobalEPC Global - A joint venture - A joint venture

between The Uniform Code between The Uniform Code Council and EAN Council and EAN International, the two main International, the two main bodies responsible for bodies responsible for overseeing bar code overseeing bar code standards.standards.– Tag protocol is a simple, Tag protocol is a simple,

license plate that uniquely license plate that uniquely identifies objects (items, identifies objects (items, cases, pallets, locations, etc.) cases, pallets, locations, etc.) in the supply chain. in the supply chain.

– The latest release; EPC The latest release; EPC Generation 2 standard.Generation 2 standard.

– Working to create data Working to create data capabilities for the 96-bit EPC capabilities for the 96-bit EPC tags.tags.

– Development of existing EPC Development of existing EPC standards for high frequency standards for high frequency 4 Item-Level Visibility in the 4 Item-Level Visibility in the Pharmaceutical Supply Chain.Pharmaceutical Supply Chain.

– Supports the Global Trade Supports the Global Trade Item Number (GTIN)Item Number (GTIN)

Healthcare Distribution Healthcare Distribution Management Association Management Association

– Recommended that Recommended that manufacturers and manufacturers and wholesalers of wholesalers of pharmaceutical drugs and pharmaceutical drugs and other health care other health care products begin putting products begin putting RFID tags carrying EPCs RFID tags carrying EPCs on caseson cases



Enterprise & Human Resource Enterprise & Human Resource

ConcernsConcerns


Enterprise Human Resource Enterprise Human Resource ConcernsConcerns

Data Flood:Data Flood:

– What are you going to do with all that data?What are you going to do with all that data?

Data Ownership:Data Ownership:

– One of the burning questions across the One of the burning questions across the supply chain will be: who owns or manages supply chain will be: who owns or manages the data? the data?

What roles should the product manufacturers, What roles should the product manufacturers, wireless companies, or application service wireless companies, or application service providers play?providers play?

Data Privacy:Data Privacy:

– As data becomes shared; How will it be As data becomes shared; How will it be managed? managed?



Legal issues revolve Legal issues revolve around privacy:around privacy:

– Employee MonitoringEmployee Monitoring

– Consumer perceptionsConsumer perceptions



Legal issues Legal issues revolve revolve around around privacy:privacy:

– Employee Employee MonitoringMonitoring

Employee monitoringEmployee monitoring::

– "A unionized employer "A unionized employer has a legal obligation to has a legal obligation to discuss with unions discuss with unions changes in working changes in working conditions."conditions."

– - Lewis Maltby, President of the National - Lewis Maltby, President of the National Workrights Institute. Workrights Institute.

– Union contracts often Union contracts often include clauses that include clauses that trigger new trigger new negotiations when negotiations when companies make companies make significant changes to significant changes to the work environment.the work environment.

GPS, video monitoring, GPS, video monitoring, and RFID can be and RFID can be significant changes.significant changes.

– Only 1 of 23 agencies Only 1 of 23 agencies polled by the GAO had polled by the GAO had identified any legal or identified any legal or privacy issues.privacy issues.

3 admitted RFID would 3 admitted RFID would let them track let them track employee movements.employee movements.



Consumer Consumer Perception - Perception - potentially the potentially the most most troublesome. troublesome.

– Some privacy Some privacy advocates warn advocates warn that RFID tags that RFID tags could be scanned could be scanned from outside a from outside a consumer's home.consumer's home.

More than 30 More than 30 privacy groups privacy groups have come out have come out against RFID.against RFID.

– States have States have proposed proposed legislation that legislation that would restrict the would restrict the use of RFID use of RFID include California include California and Utah. and Utah.

May, 2005: May, 2005: California's California's Senate approved Senate approved a ban on the use a ban on the use of RFID tags in of RFID tags in driver's licenses driver's licenses and other state-and other state-issued forms of issued forms of identification.identification.



SecuritySecurity

– RFID IS NOT GPSRFID IS NOT GPS (Global Positioning System)(Global Positioning System)

Limited read zones.Limited read zones.

– Most RFID chips today use technology Most RFID chips today use technology - allows data to be permanently - allows data to be permanently removed.removed.

– Disabling feature or kill command has Disabling feature or kill command has been specified by EPCglobal.been specified by EPCglobal.

Embedded in all EPC standards-based Embedded in all EPC standards-based products.products.


Encryption Standards:Encryption Standards:

– Encryption methods can be embedded Encryption methods can be embedded onto the tag to ensure “eyes only” onto the tag to ensure “eyes only”

– Encryption specifications for tags Encryption specifications for tags being developed by standards being developed by standards organizations.organizations.

Standard security encryption algorithms Standard security encryption algorithms for automatic fare collection done.for automatic fare collection done.

Production of the 128-bit RFID Production of the 128-bit RFID chipschips



CostsCosts

CostsCosts


Tag CostsTag Costs

Passive TagsPassive Tags: :

– $.28 to $1$.28 to $1

– Acceptable Costs:Acceptable Costs:

40% stated less 40% stated less than $.05 was an than $.05 was an acceptable cost.acceptable cost.

22% said between 22% said between $.06 and $.10 was $.06 and $.10 was acceptableacceptable..

Semi Passive Semi Passive TagsTags::

– $6 to $50 per tag.$6 to $50 per tag.

Active TagsActive Tags::

– $4 to $100+$4 to $100+

– Acceptable Acceptable Costs:Costs:

28% of 28% of respondents respondents stated less than stated less than one dollar.one dollar.

17% said 17% said between $1.00 between $1.00 and $2.50.and $2.50.


Reader CostsReader Costs

$1,500 and $3,000 currently. $1,500 and $3,000 currently. – Low-end price points for hand-held Low-end price points for hand-held

bar codebar code readers are in the $300 to readers are in the $300 to $400 range $400 range

– Acceptable costAcceptable cost: :

33% stated less than $250 while 23 33% stated less than $250 while 23 percent said between $250 and $1,000.percent said between $250 and $1,000.


System CostsSystem Costs

Generally, the cost of an RFID Generally, the cost of an RFID system can run anywhere from system can run anywhere from $20,000 to more than $1 million $20,000 to more than $1 million depending on the area to be depending on the area to be covered and application. covered and application.



A pilot program in a large, A pilot program in a large, undisclosed Chicago healthcare undisclosed Chicago healthcare facility found a minimum facility found a minimum application development kit, application development kit, which includes the software which includes the software license and eight user profiles, license and eight user profiles, and one reader and tag set, and one reader and tag set, started at $15,000 started at $15,000



On the low end of the cost On the low end of the cost spectrum, a $20,000 system could spectrum, a $20,000 system could help a hospital monitor and control help a hospital monitor and control patient movement in a small patient movement in a small inpatient area. inpatient area. – This system might include a couple of This system might include a couple of

automated door locking mechanisms automated door locking mechanisms and antennae in the ceiling to track and antennae in the ceiling to track the tags worn by patients. the tags worn by patients.



A six-month, $500,000 RFID A six-month, $500,000 RFID demonstration project at demonstration project at Vanderbilt Children's Hospital in Vanderbilt Children's Hospital in Nashville, Tenn. helped the Nashville, Tenn. helped the pediatric critical care unit solve pediatric critical care unit solve why only 50 percent of the floor's why only 50 percent of the floor's assets were actually on the floor assets were actually on the floor at any given time. at any given time.



In the past, expensive infrastructure In the past, expensive infrastructure that included specialty cabling with that included specialty cabling with highly precise receivers and I.D. highly precise receivers and I.D. tags made it not so uncommon for a tags made it not so uncommon for a 200-bed hospital to be looking at a 200-bed hospital to be looking at a price tag of $1 million or even more.price tag of $1 million or even more.– Today, a hospital is going to be Today, a hospital is going to be

looking at between $200,000 and looking at between $200,000 and $300,000 depending on the $300,000 depending on the deployment’s structure. deployment’s structure.



Bon Secours Richmond Health Bon Secours Richmond Health System, a three-hospital system System, a three-hospital system in Virginia with a fourth hospital in Virginia with a fourth hospital under construction, recently inked under construction, recently inked a $3.9 million deal for an RFID a $3.9 million deal for an RFID asset management system that asset management system that tracks, manages, and measures tracks, manages, and measures the utilization of 10,000 pieces of the utilization of 10,000 pieces of medical equipment medical equipment


ROIROI


ROIROI

The overwhelming majority of non-The overwhelming majority of non-healthcare companies cites significant healthcare companies cites significant challenges finding the return on challenges finding the return on investment (ROI) to justify their RFID investment (ROI) to justify their RFID spending. spending. – 28% cite it specifically as their biggest 28% cite it specifically as their biggest

obstacle with regard to RFID adoption obstacle with regard to RFID adoption


ROIROI

RFID – Hospital First Efforts:RFID – Hospital First Efforts:

– Hospitals are utilizing RFID for Hospitals are utilizing RFID for equipment management first to get equipment management first to get the confidence and experience to do the confidence and experience to do patient management later. patient management later.

It's easier to begin by managing 100 It's easier to begin by managing 100 known items rather than 200,000 known items rather than 200,000 patients a year.patients a year.


ROI –Asset ROI –Asset ManagementManagement

Research shows that hospitals Research shows that hospitals lose 5 percent to 15 percent of lose 5 percent to 15 percent of their equipment inventory their equipment inventory annually.annually.– Losses may be as much as Losses may be as much as

$4,000 per bed – this doubles $4,000 per bed – this doubles when misplaced and inefficiently when misplaced and inefficiently used equipment is factored in.used equipment is factored in.

– One hospital lost $250,000 worth of One hospital lost $250,000 worth of defibrillators in a year.defibrillators in a year.

– Another was losing $8,000 worth of Another was losing $8,000 worth of cardiac equipment monthly.cardiac equipment monthly.


ROI - ROI - Asset ManagementAsset Management

Bon Secours Bon Secours Hospital: Hospital:

– Lost time per Lost time per shift looking for shift looking for equipment:equipment:

Employees spent Employees spent up to 25% to 33% up to 25% to 33%

Nurses 15 to 20 Nurses 15 to 20 minutesminutes

Post RFID: Post RFID: Savings of more Savings of more than $200,000 in than $200,000 in 2004 alone were 2004 alone were expected. expected. – The bulk of the The bulk of the

projected savings projected savings came from not came from not having to replace having to replace equipment hiding equipment hiding in a corner. in a corner.


ROI - RROI - Rental Costsental Costs

Most hospitals Most hospitals spend as much spend as much as $50,000 a as $50,000 a month in month in unnecessary unnecessary rental costs due rental costs due to misplaced and to misplaced and lost rental lost rental equipment.equipment.

– At Vanderbilt, At Vanderbilt, hospital employees hospital employees often swapped often swapped cables from one cables from one piece of equipment piece of equipment to use with another to use with another in a different unit.in a different unit.

Typically, the cables Typically, the cables were never were never returned, and returned, and replacing the cables replacing the cables cost the hospital cost the hospital between $3,000 and between $3,000 and $6,000 a month.$6,000 a month.

ROI pending, but ROI pending, but positive.positive.


ROI - ROI - Patient TrackingPatient Tracking

By law, patients who posed a By law, patients who posed a danger to themselves or others, danger to themselves or others, must be evaluated because they must be evaluated because they may be violent, depressed and may be violent, depressed and suicidal.suicidal.


ROI - ROI - Patient TrackingPatient Tracking

Mercy Hospital, Mercy Hospital, Coon Rapids, MN:Coon Rapids, MN:– In 2004, Mercy In 2004, Mercy

Hospital the first Hospital the first hospital in the hospital in the nation to employ nation to employ radio frequency radio frequency ID (RFID) wrist ID (RFID) wrist bands to track bands to track emergency room emergency room patients. patients.

– The radio The radio frequency E.R. frequency E.R. system cost system cost $25,000 to $25,000 to $175,000; 2,100 $175,000; 2,100 emergency room emergency room patients.patients.

60% reduction in 60% reduction in security guard and security guard and nurse "one-on-nurse "one-on-ones.”ones.”

Security guard Security guard costs alone were costs alone were reduced by an reduced by an estimated estimated $110,000.$110,000.


ROI - ROI - Staff & Patient Staff & Patient TrackingTracking

Hannibal Regional Hannibal Regional Hospital Hannibal Hospital Hannibal Hospital, a 91-bed Hospital, a 91-bed facility.facility.

– Using patient and Using patient and staff badges with staff badges with embedded RFID embedded RFID chips learned:chips learned:

20% of outpatient 20% of outpatient treatment was treatment was being handled being handled after hoursafter hours

Some physicians Some physicians were not using were not using 50% of their time.50% of their time.

12 month ROI is 12 month ROI is expected through expected through reduced overtime reduced overtime costs, increased costs, increased efficiencies from efficiencies from block scheduling block scheduling and better inventory and better inventory control.control.


ROIROISupply Chain – Inventory VisibilitySupply Chain – Inventory Visibility

The total The total supply chain supply chain represents 35% represents 35% to 45% of to 45% of hospital’s total hospital’s total expense.expense.– Of this, supplies Of this, supplies

and medical and medical equipment equipment represent 25%. represent 25%.

On average, hospitals On average, hospitals carry 300% of required carry 300% of required daily medical supplies.daily medical supplies.

A 200 bed hospital has A 200 bed hospital has on average has 37,000 on average has 37,000 medical supply items in medical supply items in stock on any given day.stock on any given day.

Each bed in a hospital Each bed in a hospital has on average 68 items has on average 68 items associated with it.associated with it.– 58 are reusable; 10 are 58 are reusable; 10 are

permanent medical permanent medical devices.devices.

Pharmacy chains, Pharmacy chains, hospitals, and HMOs hospitals, and HMOs hope to use RFID and hope to use RFID and the paperless audit trail the paperless audit trail it creates on boxes of it creates on boxes of drugs to aid in recalls.drugs to aid in recalls.


ROIROISupply Chain – Inventory VisibilitySupply Chain – Inventory Visibility

The July, 2005 Most Wired data The July, 2005 Most Wired data showed common supply chain tools showed common supply chain tools among the nation's top tech among the nation's top tech organizations:organizations:

– Automated purchasing at preset Automated purchasing at preset limitslimits

– Electronic systems that turn Electronic systems that turn requisitions into purchase orders requisitions into purchase orders without re-keyingwithout re-keying

– Bar-codes to track a wide range of Bar-codes to track a wide range of materials and supplies.materials and supplies.


ROIROISupply ChainSupply Chain

Uncoordinated Uncoordinated efforts efforts between between hospitals, hospitals, vendors, vendors, shippers and shippers and suppliers are suppliers are keeping RFID keeping RFID out of out of hospitalshospitals. . August, 2005August, 2005

Manufacturers, Manufacturers, suppliers and suppliers and hospitals need hospitals need different kinds of different kinds of information. information.

– Bar codes are used Bar codes are used to support needs of to support needs of vendors, not the vendors, not the needs of the needs of the hospital.hospital.

– Hospitals don't use Hospitals don't use codes on shipped codes on shipped packages to packages to distribute distribute equipment and equipment and supplies across supplies across hospital hospital departments.departments.


ROI LessonsROI Lessons

For healthcare, the common For healthcare, the common approach today keeps in mind approach today keeps in mind that capital costs of building that capital costs of building multiple wireless systems are too multiple wireless systems are too high without some strategic high without some strategic leveraging. leveraging.


ROI Lesson - Leverage InfrastructureROI Lesson - Leverage Infrastructure

Beth Israel Beth Israel Deaconess Deaconess Medical Center in Medical Center in Boston decided Boston decided that the most that the most compelling compelling business case can business case can be generated be generated when you use the when you use the wireless LAN/Wi-wireless LAN/Wi-Fi/IEEE 802.11 Fi/IEEE 802.11 family of family of standardsstandards. .

Simple test: Simple test: “Does the RFID “Does the RFID vendor require vendor require any additional any additional hardware to be hardware to be installed over installed over and above using and above using tags to make tags to make their solution their solution work?" work?"


ROI Lesson - Asset ManagementROI Lesson - Asset Management

Using conservative figures, break even for Using conservative figures, break even for implementing RFID tagging has been implementing RFID tagging has been proposed for devices costing $47 and up - proposed for devices costing $47 and up - the average device value is $90 device.the average device value is $90 device.

The ROI on a RFID system in 12 to 18 months The ROI on a RFID system in 12 to 18 months is common and in some cases, the annual is common and in some cases, the annual ROI could be as high as 450% a year - just ROI could be as high as 450% a year - just from equipment management.from equipment management.

Active RFID applications, which can be Active RFID applications, which can be tracked on an RFID network, were much tracked on an RFID network, were much more popular than passive RFID networks, more popular than passive RFID networks, which require a nearby reader.which require a nearby reader.


Building Business Building Business CasesCases



Building a business case for RFID in Building a business case for RFID in healthcare centers on three points:healthcare centers on three points:– Increased efficiency through elimination of Increased efficiency through elimination of

some human elements in processes. some human elements in processes. – Enhanced data capacity = greater Enhanced data capacity = greater

functionality over bar codes. functionality over bar codes. – Intangibles & soft dollars.Intangibles & soft dollars.



Expense Management: Expense Management: Increase productivity by 2% and Increase productivity by 2% and 8% through: 8% through:

– Inventory and supply chain visibilityInventory and supply chain visibility

– Better charge captureBetter charge capture

– Staff productivityStaff productivity

– Utilization of equipmentUtilization of equipment

– SecuritySecurity



Operation Efficiency:Operation Efficiency:– Increased labor efficienciesIncreased labor efficiencies– Defined workflowDefined workflow– Automate manual actionsAutomate manual actions– Improved sequence countsImproved sequence counts



Workforce Impact:Workforce Impact:– Lower staff anxiety, turnover, hiring Lower staff anxiety, turnover, hiring

costscosts Improve system efficiency.Improve system efficiency. Reduce forms processing time.Reduce forms processing time. Improve tracking of labor and supplies.Improve tracking of labor and supplies. Improve communications between Improve communications between

doctors, nurses and patients.doctors, nurses and patients.



Patient Patient Experience & Experience & SatisfactionSatisfaction

– Early adopters of Early adopters of RFID discovered RFID discovered that time with that time with patients increases. patients increases.

– More time spent More time spent with patients, the with patients, the more you will see more you will see improved patient improved patient safety, clinical safety, clinical outcomes, and outcomes, and patient patient satisfactionsatisfaction. .

– Prevents data entry Prevents data entry and collection and collection errors.errors.

– Improves patient Improves patient moving through moving through system efficiencysystem efficiency

– Reduce forms Reduce forms processing timeprocessing time

– Improve Improve communications communications between doctors, between doctors, nurses and patientsnurses and patients

– Crosses language Crosses language barriersbarriers



Risk Mitigation: Risk Mitigation:

– Monitor for equipment hazards & Monitor for equipment hazards & maintenancemaintenance

– Medical Errors: Transfusions, lab, Medical Errors: Transfusions, lab, patient falls, medication.patient falls, medication.

– Counterfeit drugs, recalls & outdated Counterfeit drugs, recalls & outdated stockstock



RFID-enabled applications are RFID-enabled applications are going to open up all sorts of going to open up all sorts of innovative applications. innovative applications. – Many of these are going to come to Many of these are going to come to

light after hospitals and companies light after hospitals and companies have had a chance to gain some have had a chance to gain some experience with RFID systems.experience with RFID systems.

– Most benefits for a health care Most benefits for a health care provider and to the patient will come provider and to the patient will come from process change - the from process change - the technology is simply an enabler. technology is simply an enabler.


VendorsVendors

RFID is still in its formative years and RFID is still in its formative years and will be hotly contested across all will be hotly contested across all technology segments .technology segments .

– The worldwide RFID market (readers, active The worldwide RFID market (readers, active tags, passive tags, ICs, software, and tags, passive tags, ICs, software, and services):services):

2004 = $1.49 billion 2004 = $1.49 billion 2008 = $4+ billion 2008 = $4+ billion 2010-2014 = $10 billion2010-2014 = $10 billion


Developing StrategyDeveloping Strategy

““It's not the RFID technology that's It's not the RFID technology that's important; it's the reengineering of important; it's the reengineering of business processes that will deliver business processes that will deliver value. Companies need to decompose value. Companies need to decompose their business processes and rebuild their business processes and rebuild them to take advantage of the data them to take advantage of the data that RFID generates.”that RFID generates.”– Mike O'Shea, Kimberly-Clark's Director of Mike O'Shea, Kimberly-Clark's Director of

Corporate AutoID/RFID Strategies and Corporate AutoID/RFID Strategies and Technology.Technology.


Developing StrategyDeveloping Strategy

There are no There are no easy answers—easy answers—and, in most and, in most cases, no cases, no "right" answers."right" answers.

– There are frameworks There are frameworks for thinking about how for thinking about how to manage risk more to manage risk more effectively and reach effectively and reach the right balance with the right balance with potential return that potential return that will show benefits to will show benefits to managers, strategic managers, strategic planners, and C-level planners, and C-level executives alike.executives alike.

The key is, first, to examine The key is, first, to examine your basic business process your basic business process strategy to ensure you are strategy to ensure you are following the course that following the course that best supports the business. best supports the business.

Second, to determine the Second, to determine the right tactics to support your right tactics to support your strategy. strategy.

This two-step process may This two-step process may sound simple enough, but to sound simple enough, but to execute it correctly you execute it correctly you must:must:

– Have a firm grip on your Have a firm grip on your company's core company's core strategies.strategies.

– Be willing to invest in Be willing to invest in new forms of internal new forms of internal analysis.analysis.

– Be prepared to make Be prepared to make decisions that might fly decisions that might fly in the face of in the face of organizational organizational precedent.precedent.

RFID In Health Care In 2005 by Jim Bloedau

Technology

Transcript of RFID In Health Care In 2005 by Jim Bloedau