Just when it looked like the globe was abundantly papered with bar codes, a host of technology companies are staking out hospitals, eagerly poised to start slapping the sticky labels on nurses, patients and every single dose of medication that passes between them.
With a 90-day public comment period closed last week, the Food and Drug Administration has promised to approve by year-end a proposed regulation that will require bar codes on all single-unit packages of prescription drugs, over-the-counter drugs commonly used in hospitals, vaccines and biologics such as blood. Once the regulation is in place, the FDA will give pharmaceutical makers three years to comply.
As a result, bar-coding technology is tentatively headed for a hospital near you--a mere 23 years after IBM first introduced electronic scanners to the rest of the world. But the considerably delayed adoption of the technology by the healthcare industry does not seem to have dampened the anticipation, especially among hospitals and the companies that proffer the technology.
As of two weeks ago, the FDA had received more than 70 comments on the proposed rule, said Christine Parker, an FDA spokeswoman. Those sharing their comments with Modern Healthcare all uniformly praised the FDA for taking the initiative in implementing a technology that promises to reduce potentially deadly--and costly--medication errors.
Not surprisingly, the companies that sell bar-coding technology favored the FDA rules, which they helped craft both directly and through various trade groups and associations. Hospitals, in their comments, strongly supported the proposal but suggested technical modifications that would give the rule some teeth, such as requiring bar-code labels on sample prescription drugs and standardizing the design of the label to make it as universal as possible.
The pharmaceutical industry, which would bear the brunt of the cost of the regulations, also said it was in support of the proposal but argued for technical modifications that would appear to make the rule more flexible. The Pharmaceutical Research and Manufacturers of America, a Washington-based trade group, said drug companies would like to see a waiver of the requirement for medication doses too small to accommodate a bar-code label. That could be a problem for hospitals, whose best safety and cost interests would be served by having bar codes on even the smallest dose units of drugs.
In his comments to the FDA, William Churchill, director of pharmacy services at 709-bed Brigham and Women's Hospital in Boston, stressed the importance of making "sure they don't let the companies back out of providing (bar codes on) unit doses," he said. "The fear has always been if the FDA makes them bar- code and do things they don't want, they would say, `Fine, we won't provide unit dose packaging.'... They need to make sure the pharmaceutical industry doesn't backtrack here."
Hospital alliance Premier said the bar-code rule "ought to be viewed ... as a stepping stone in a larger, evolutionary process." Premier pressed for requiring more information on bar-code labels, such as lot and expiration date, within five years of the new rule's implementation. Eventually, Premier said, it also would like to see bar codes on at least some medical devices.
Better late than never
As an industry that has been notoriously slow to enter the information age, hospitals represent a wide-open market for information technology companies. Backed by a federal decree that some IT companies lobbied to put in place, bar-coding purveyors are gearing up to cultivate the virgin territory. Though drug bar coding is just a small piece of the healthcare information technology market, FDA-mandated bar coding could help prime the pump, especially for big IT companies that already are actively marketing more encompassing information systems to technologically challenged hospitals.
"The FDA making it official is giving the (healthcare technology industry) a huge boost, and we'll see all kinds of product combinations," said Mitchell Work, president of the Work Group, an Evanston, Ill., healthcare information technology consulting company.
Siemens Medical Solutions Health Services Corp. has been selling a drug bar-coding system since late 1999, shortly after the Institute of Medicine released its damning report on medical errors, said Alan Barbell, Siemens' market manager for patient safety. Yet just over 100 customers have purchased the system, which is "still in the early stages of rapid implementation," Barbell said. Of those, only seven hospitals have gone "live," four of them hospitalwide. Why? Most drugs aren't bar-coded yet to the unit of dose, so if a hospital wants to bar-code, it will have to do the difficult job itself.
Still, Siemens is "in this from a broader clinical perspective," offering an array of IT systems that can easily integrate with its bar-coding system. Eventually, bar-coding systems will be just one small piece of a comprehensive software system that wraps around all areas of a hospital, Barbell said. Siemens declined to disclose pricing, citing the vast range of costs depending on the size and needs of the hospital.
Drug bar coding, likewise, is an opportunity that hasn't been lost on McKesson Corp. The San Francisco drug distributor has been lobbying for what it would like to see in a regulation since December 2001, when HHS first announced its intent to implement a bar-coding mandate, said Mary Beth Navarra, McKesson's director of patient safety. The effort is not unlike needle manufacturer BD's proactive role in working on safe needle legislation in 2000. The law later proved to be a shot in the arm for BD's sales (Nov. 27, 2000, p. 26).
McKesson is generally pleased with the proposed regulation as it stands. Its primary comment is aimed at "helping the FDA understand that there are a lot of hospitals that have bar-code technology in place today," Navarra said. "We want to make sure the regulations are practical and people don't get penalized" for being early adopters of bar-coding systems.
In the past five years, BD itself has forayed into the IT market, although it still is testing the waters for drug bar coding. In conjunction with its clinical laboratories division, the needle manufacturer has been developing a bar-coding system for use in the clinical laboratory since it acquired a division of Cincinnati-based MedPlus in 1998, said Nick Conti, vice president of business operations and technology at BD.id in Franklin Lakes, N.J. The system, aimed at reducing the need for more laboratory tests due to the misidentification of patients or mislabeling of specimens, will be launched in the fall. It's a system that would easily translate to hospital pharmacies, but BD is hedging about whether it will sell to that part of the market.
"There's just not 100% compliance with medications being bar-coded and the expense is just not a good business proposition right now for hospitals. It would be something we'd consider once the rule takes effect," Conti said.
Pharmacy distributor AmerisourceBergen Corp. was a later entry to the market, purchasing stand-alone bar-coding provider Bridge Medical, Solana Beach, Calif., for about $27 million in stock last year (Nov. 11, 2002, p. 22). Before the sale, Premier owned a 5% stake in Bridge but since has sold the AmerisourceBergen stock it received from the deal, Premier spokeswoman Pat Poston said.
Sales have picked up in the past year on the expectation that the FDA would issue a new regulation on bar coding. Bridge has 75 hospitals under contract, up from eight just one year ago, said Terance Kinninger, chief operating officer at Bridge. The company estimates that less than 2% of all U.S. hospitals have bar-coding capabilities at this time.
The typical cost of implementing a Bridge bar-coding system in a 300-bed hospital is about $1.5 million, depending on the infrastructure already in place, Kinninger said. At McKesson, costs can range from $350,000 to $1 million, depending on the size and needs of the hospital, Navarra said.
As pharmaceutical distributors, both McKesson and AmerisourceBergen said they entered the market as part of a strategy to offer a full range of services to meet their customers' diverse pharmaceutical-related needs. Bar coding also offers the opportunity to get into a business line with higher margins than the notoriously thin profits associated with moving drugs from loading docks to hospitals, Kinninger said. Bridge anticipated revenue of about $25 million in 2003 when AmerisourceBegen purchased it last year.
Despite all this movement, healthcare is a backwater of bar coding. Recall that more than a decade ago, the first President Bush experienced a politically charged moment with a quart of milk, a light bulb and a bag of candy at the National Grocers Association convention in Orlando, Fla., when he expressed wonderment over the electronic bar-code scanner. But despite the technology's formidable inroads in retail stores, the ubiquitous bar code is curiously missing from most hospital medicines--even from the single-dose packaging of what drugmaker McNeil Consumer & Specialty Pharmaceuticals touts as "the No. 1 brand of over-the-counter pain reliever used most often in hospitals," namely Tylenol.
Patient safety pays off
Patient safety--"the current issue du jour of healthcare"--is driving the proposal, said Work, the IT consultant. That translates into big dollars. The FDA estimates that once the rule is implemented, 50% of all medication errors will be intercepted, resulting in 413,000 fewer adverse events in a 20-year period. In today's dollars, that would save $41.4 billion, and hospitals would save as much as an additional $7.6 billion in record-keeping and reporting costs, not to mention the savings in litigation-associated costs, according to the FDA.
The technology also promises to help hospitals better capture charges, control inventory and maximize staff resources. In short, it will do everything for hospitals that bar coding did for retailers, plus reduce potentially life-threatening medication errors, the FDA said.
On the surface, the process seems no more complex than purchasing a carton of eggs. Generally, before the medication is administered, the healthcare worker scans his or her own bar-coded ID tag, the medication and the patient to ensure the "five rights" are in place: the right dose of the right drug through the right route at the right time on the right patient.
The glacial speed with which healthcare is adopting the technology should come as no surprise to anyone with an intimate knowledge of how the business operates. Indeed, in a question-and-answer paper regarding the proposed rule, FDA officials indicated they stepped into the fray because of the inertia. Hospitals said they would adopt the technology when pharmaceutical companies provided the necessary labeling; pharmaceutical companies, meanwhile, said there was no point in supplying the labeling if hospitals didn't have the technology to take advantage of it.
"The private sector had not arrived at a consensus, and even when firms had placed bar codes on their products, the quality of those bar codes varied," the FDA said, explaining the impetus for the regulation.
The proposed regulation won't force hospitals to purchase the hardware and software necessary to take full advantage of the bar codes. The FDA "is doing it as a leap of faith that if bar codes are on drugs, hospitals will scan them," McKesson's Navarra said. But getting a system up and running will be no small feat judging by the handful of early adopter hospitals that already are constructing and integrating the error-reducing technology into their clinical operations.
At Brigham and Women's, it will be a $2.6 million effort with undetermined savings, said David Bates, chief of general internal medicine and a nationally known leader in error prevention. "I expect it will reduce the number of dispensing errors by 50% to 80% and administrative errors (associated with orally consumed pills) by the same amount," Bates said.
After a year and a half of planning, Brigham and Women's is putting the finishing touches on the bar-coding system it developed in-house, Churchill said. The approximate $2.6 million cost encompasses hardware, software and training. The hardware costs include 400 hand-held bar-code scanners and 400 laptop computers that will "plug" into the wireless system and interface with the electronic medication administration record. The system should be fully operational by year-end.
In the absence of a federal regulation, a major piece of the undertaking was implementing a process to bar-code all of the drugs that are administered at Brigham and Women's. Churchill said 60% of the drugs dispensed are not bar-coded at this time. As a result the drug-relabeling center that has been set up in the hospital anticipates it will repackage and label 2.8 million doses of medicine in the first year at a cost of $300,000, he said. The repackaging cost likely will diminish as more manufacturers bar-code their products--the only foreseeable impact of the proposed FDA regulation, Churchill said.
Already, the hospital is making some purchasing decisions based on the availability of bar-coded products. About six months ago, Brigham and Women's opted to purchase a generic brand of acetaminophen rather than Tylenol. "The product described as being the No. 1 medication used in hospitals across America is true everywhere but here because we made a decision to go with a bar-coded product," Churchill said. "We're spending slightly more for the generic, but it's bar code-ready and we don't have to repackage."
"We have been evaluating an implementation strategy for bar coding and we certainly will comply with any federal guidelines about this," said Pat Donohue, a McNeil spokeswoman.
Other hospitals with more bar-coding experience swear by the clinical benefits, although they also are hard-pressed to quantify the cost savings. Two-hospital Capital Region Health Care in Concord, N.H., which started using a bar-code medication system in 1992, reported that the most dramatic result has been an 80% drop in "some types of self-reported errors," said Josie Bendiks, director of clinical information systems. From 1994 to 1997, the system avoided 300 medication errors, which translated into savings as high as $973,000, she said.
"Technology has been slow to come to the healthcare arena and nurses are slow to embrace using electronic documentation," said Ivy Holt, manager of nursing systems at Providence Portland (Ore.) Medical Center. "But of all the systems they touch, this is one system they do not want to lose."
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