Doctor’s Orders: RFID Desperately Needed to Curb Waste along the Medical Supply Chain
With healthcare prices rising, you would assume that the last thing hospitals could afford to do is lose track of their high-cost, high-value medical equipment and devices (including implantable such as pace-makers and stents); yet that is what is currently happening on a large scale. Medical supply waste is a major problem, one so rampant that the FDA recently passed their own law to try and reign it in. The problem is tied expressly to the supply chain, where a lack of proper end-to-end visibility on the part of the shippers, as well as a tendency towards what can only be described as hoarding by the hospital purchasers, has led to massive amounts of medical devices going unused and unaccounted for. Luckily, there is a solution to the problem on the horizon. One that, if implemented correctly, could completely turn around the medical equipment supply chain and put a stop to this chronic problem.
If any of the above sounds overly grim, consider the numbers: the value of medical devices that go wasted annually amounts to almost $5 billion. The percentage of medical equipment and products that will expire while in storage at hospitals is roughly 7-10. Meanwhile, over 2 hours of an average nurse’s time on-shift will be devoted to searching for the products needed for a procedure, many of which will have likely passed their expiration dates by the time that they are found (if they are found at all). Forgetting for a moment the human cost to all of this (patients not receiving the quality treatment they so desperately need on time), all of this of this adds up to a 1% loss of potential revenue across all health systems per year.
There are several factors that, when combined, account for this culture of waste along the medical supply chain. The first is one of scattered inventory that gets walked into hospitals without proper recording, so that even when the hospitals are in possession of their needed supplies, they are unable to locate them. Bulk purchasing on discounted merchandise by hospital managers, undertaken in order to protect against future stockouts, results in hospitals hoarding more products than they need, yet, because the supply chain is so sloppy, no one knows when the equipment arrives and where it gets stored.
Consolidation of hospital systems is desperately needed to remedy this disastrous status quo. Standardization of both accountability and purchasing is being implemented, thanks in part to hospitals having to comply with the FDA’s Unique Device Indification law, and partly out of a move away from consignment of high-value implantables (which is responsible for much of the inefficiency that results in these products going expired while sitting on hospital shelves).
These are both good first steps. But what will truly revolutionize the supply chain is the implementation of radio-frequency identification (RFID). This technology uses electromagnetic fields in order to automatically identify products by tags attached to them. Cloud-based RFID platforms are capable of providing total visibility of inventory, and allow for full electronic integration of supply chain record keeping and hospital IT systems. This automated tracking system can monitor merchandise along every part of the supply chain, from manufacturer, to shipping and receiving, to stocking, to point-of-care usage.
The new ‘smart’ supply chain database created by this technology will help health systems optimize their aggregate spend, inventory levels, and costs; and they will help track and improve the overall care given to patients. So long as hospitals properly implement it across all of their locations, RFID can potentially eradicate medical supply waste along the supply chain altogether.
