Consider the state of bar-coding in the nation's hospitals, and it seems as if the hospital industry is hopelessly out of step with the rest of the world when it comes to information technology. But given the opportunity to leapfrog over the 24-year-old technology and go directly to the next best thing--radio-frequency identification, or RFID--will hospitals jump?
At least one technology expert thinks so.
"Although the Food and Drug Administration has mandated bar-code technology in hospitals, with RFID technology, we believe that's like the Chinese government mandating copper telephone wires," says Michael Gallagher, a partner in the health and life sciences division at technology consulting giant Accenture. "There's no reason why China should install telephone poles, since it can go immediately to cell phones."
Likewise, now that bar codes have become almost a second skin for consumer products everywhere, innovators such as Wal-Mart and the Defense Department are moving swimmingly along, adopting RFID and alerting their top suppliers that RFID tags will be a requirement for doing business with them by next year.
Meanwhile, in the healthcare backwater, hospitals are just now facing the reality that they will probably need to think about adopting bar-coding at the bedside by 2006, when drug manufacturers are under an FDA mandate to apply bar codes to single-dose units of nearly every prescription and over-the-counter drug dispensed in hospitals.
It is widely expected that by applying bar-code tagging to every patient, hospital worker and dose of medication administered in a hospital, medication errors will be avoided at a considerable savings of dollars and lives. But some are wondering if perhaps RFID could do it better.
RFID is the modern miracle that allows cars to zip through toll plazas without stopping to tender cash, and it is the alert buzzer that sounds if someone tries to leave a department store before a salesperson removes those bulky plastic tags. The technology, in which chips that emit radio signals are embedded in products so they can be tracked, is rapidly evolving. Some of the chips are smaller than a single piece of glitter, Gallagher says.
The consumer products industry, at least, is moving forward in adopting standards around RFID, so industries can talk to each other throughout the world and avoid the "Betamax vs. VHS situation" that occurred when video-recording technology was in its nascent stage, Gallagher says. But there is concern that if hospitals don't pay at least some attention to the advances being made on the RFID front, other industries will impose their standards on the healthcare industry, he says.
RFID's applicability in the healthcare arena is limited only by the imagination. It could and is being used to track patients and equipment, and it could conceivably replace the bar code on medications. Apart from the question of its compatibility with other electronic equipment in a hospital, the only question surrounding RFID is its business value, Gallagher says. But it's a big question.
As impressive as the technology is, it hasn't quite arrived like bar-coding has. The three major pharmaceutical distributors, AmerisourceBergen Corp., Cardinal Health and McKesson Corp., are all heavily invested in bringing bar-code technology to the bedside and are exploring RFID, but as yet only are as far as the warehouse, stopping short of hospitals. Most of the innovation is taking place further up the supply chain on pallets and cases, but in terms of both cost and technology, RFID is not ready for the bedside, says Michael Kilpatric, a spokesman for AmerisourceBergen. "It may go to the hospital, but there is going to be a cost issue, and it may take some time to get there," he says.
But hospitals appear to see the potential of the technology. The investment arm of Ascension Health this month announced it has invested $2.5 million in a fledgling information technology company, Radianse, which manufactures tracking systems that use RFID.
Most analysts concede that the technology isn't going anywhere near the patient as long as the cost remains where it is right now. Passive RFID tags--tags that only go into action when they are in close proximity to a "reader" much like a bar-code scanner--cost about 20 cents each, says Gary Dolch, executive vice president of quality and regulatory affairs for Cardinal. That cost will come down as the technology is widely adopted, but it is considerably more than the pennies it costs to slap a bar code on medication.
"The focus right now is around patient safety at the bedside," says Bruce McWhinney, Cardinal's senior vice president of clinical affairs. "Bar-coding, I think, is critical. I think there is too much momentum around safety at the bedside to put bar-coding on the back burner right now."
Still, for pharmaceutical manufacturers, distributors and retailers, there is a compelling argument for RFID, and McKesson is actively exploring the possibilities, says Ronald Bone, McKesson's senior vice president of distribution support. The explorations on the part of the distributors have been spurred by HHS Secretary Tommy Thompson, who has recommended that drugs be tagged with RFID at the unit level by 2007 in order to track drugs and prevent counterfeiting, Bone says.
This month, McKesson and eight other companies representing manufacturers, distributors and retail pharmacies will begin moving products through the supply chain to make sure the RFID-enabled tags can do what everyone suspects they can. RFID far surpasses bar-coding in tracking products at the case and pallet levels because boxes of drugs can be scanned or read without tearing open cartons.
The Healthcare Distribution Management Association, a trade organization for pharmaceutical distributors, has conducted an RFID cost-benefit analysis study for the healthcare distribution industry, but the results will not be available for several weeks, says Lisa Clowers, the HDMA's vice president of supply-chain processes and technology. In the meantime, according to preliminary presentations made by A.T. Kearney, the management consulting firm conducting the analysis, the use of RFID in pharmaceuticals shows some "attractive economics."
Some innovative hospitals are considering leap-frogging to RFID now. Since last spring, Bon Secours Richmond (Va.) Health System has been tagging the approximately 12,000 pieces of movable equipment at its three hospitals, including IV poles, pumps, wheelchairs, stretchers and hospital beds, says Jerrold Maki, the system's chief administrative officer.
The initiative was driven by employees, particularly nurses, who complained that they spent far too much precious time going on "hunting expeditions" to find equipment when they needed it. Now with all the equipment tagged, an employee only has to go to the nearest computer and click on an icon to locate needed equipment.
The deal was accomplished without any capital investment through a five-year contract with Agility Healthcare Solutions, Maki says. Bon Secours pays an undisclosed monthly fee that covers the tagging, operation of the computer system and the cost of installing Wi-Fi technology throughout the hospitals.
Maki says the system will save money in several ways: from capital avoidance, which goes hand in hand with increased utilization for each piece of equipment; from theft prevention; and from improved employee productivity. An analysis projected that during a typical eight-hour nursing shift, as many as 20 minutes of equipment-hunting would be saved, he says. Also, to support the system, Agility covered the installation of Wi-Fi technology throughout the hospitals. In total, Maki says the system is expecting to save at least $200,000 annually over and above Agility's fees. It would have cost Bon Secours $750,000 just to put in its own Wi-Fi system, he adds.
St. Luke's Health System, Kansas City, Mo., is considering RFID at the bedside for a new hospital in Lee's Summit, Mo., that is due to open in January 2006, says John Wade, the system's chief information officer. St. Luke's, a nine-hospital system that won a 2003 Malcolm Baldrige National Quality Award, considers itself an early adopter on the technology curve.
The barrier to RFID, Wade says, is cost, though he says he is convinced of RFID's technical superiority to bar-coding. The cost difference between RFID, perhaps 10 cents per passive tag, vs. a bar code, perhaps 3 cents per sticker, doesn't sound like much until you consider that it would add cost to every dose of medicine administered, he says.
"We're on the cusp of an era with this technology," Wade says. "There is no limit to where this can go to benefit patients. ... I really don't think I'm out in space all by myself."
This article originally appeared in the July 12, 2004, issue of Modern Healthcare.