NEW TECHNOLOGY FOCUSES ON EQUIPMENT MANAGEMENT

All of healthcare is focusing more on regulatory compliance, reducing cost and improving patient satisfaction, but the current infrastructure at most hospitals makes that difficult to achieve. Now radio frequency ID is making it possible to track and manage thousands of products that move each day.

by Michael Casey

Published: June 8, 2004
Belt-tightening and cutting corners no longer are viable strategies if hospitals wish to continue reducing costs, particularly if they expect to improve quality of care. There must be a new infrastructure put in place if hospitals want to improve their business process and workflow, preserve precious capital and reduce operating expenses.

Automating the healthcare supply chain process, in which products are tracked from the manufacturer to point-of-use, is one area that hospitals have focused on heavily the past several years. And one of the most talked about solutions that is beginning to get some attention centers around radio frequency identification, or RFID.

RFID uses a low-frequency signal to transmit a unique identification number through antennas attached to a hospital's ceilings and linked to a wireless computer network. Hardware and software applications determine its exact location within the hospital, and the data is displayed on a nurse's computer screen.

The radio-frequency identification tag, which is really a tiny computer chip, does not require that products be visible to be 'read.' Items packed inside of cases and even loaded onto trucks can be identified by a RFID 'reader.' The chip can carry as much or as little information as the user desires, and also can identify people and track the movements of both.

Yet, RFID only can capture data. It is the application of software that goes along with improved business processes that provide not only a solution but a significant return on investment (ROI), according to Fran Dirksmeier, chief executive officer of Agility Healthcare Solutions, LLC, a Richmond, VA-based service provider of RFID-enabled resource technology and workflow management solutions.

'We are the only company in healthcare that not only tracks and manages assets, we measure the utilization of assets, optimize business processes and enhance workflow for the hospital using RFID,' says Dirksmeier, a healthcare industry veteran for more than 20 years. 'We've started with equipment management, because there is a great return on investment and lays an infrastructure that's universal around the hospital.'

A Universal Problem
Equipment management is a universal problem. It affects just about every facet of the hospital, from the loading dock to the surgical suite. There literally are thousands of pieces of mobile medical equipment that move around the hospital each day with a specific business process and workflow attached to them.

Agility's equipment management application, called AgileTrac, will track, manage and measure the utilization of mobile assets. But tracking those assets also is a means to an end, Dirksmeier said.

'By tracking the movement of assets and state of the assets, we can tell if it is clean and available for use, or if it's already in use or out-of-service,' he said. 'Ultimately, we are going to get the right asset at the right place at the right time. It also has to be in the right condition, because we include all biomedical engineering requirements and service history, which is very important. So we are able to reduce the amount of purchases required to reduce the capital investment required in mobile assets.

'Hospitals have plenty of mobile assets; they just don't know whether those assets are positioned for proper usage. That's why we stay engaged with the customer at all times. We project a very strong ROI and work with the customer to improve their business processes and workflow. That's why I think we're going to catch on.'

Agility Hired By Bon Secours Richmond
Agility provides supply chain technology to several industries, including food & beverage, brewing, retail, chemical and automotive. Agility's healthcare management services cover all medical and transport equipment, as well as surgical instruments.

Since its debut in April, Agility has provided tracking and management services for critical mobile medical equipment for the Bon Secours Richmond Health System in Richmond. Agility was able to demonstrate to Bon Secours officials that employees were spending nearly a third of their time searching for equipment that either had been taken home by patients or left in ambulances. Dirksmeier estimated that Bon Secours was losing an average of 10 percent of its inventory annually.

'One of the advantages we have... is our ability to access some pretty significant engineering and product development,' Dirksmeier said.

Under a new five-year, fee-based agreement, Bon Secours will utilize AgileTrac in its three hospitals—Saint Mary's Hospital in Richmond, Memorial Regional Medical Center in Mechanicsville and Richmond Community Hospital—with a fourth hospital under construction. Bon Secours Richmond is one of Richmond 's largest employers.

'The system is operational and we're on our way,' Dirksmeier said.

Implementation Process
When Agility signed with Bon Secours, the first thing it did was normalize all of the hospital system's data and take a full physical inventory of its healthcare products. Agility tagged all the assets with an RFID chip to create a universal database, then installed a wireless network if the hospital did not have one. They then provide Bon Secours' employees with education and training to operate the network effectively.

It took Agility about 25 weeks to implement RFID in all three Bon Secours hospitals. Standard implementation is about a 16-week process, Dirksmeier said. He said the hospital system should expect to save at least $200,000 in its first year and more in the following years from less shrinkage, fewer rentals and better staff productivity.

'By putting an infrastructure with our RFID and auto ID wireless system into the whole facility, because equipment is needed throughout the hospital, we were able to give it a leveragable infrastructure to do other applications with,' said Dirksmeier, who before coming to Agility spent the previous five years as president of McKesson Medical-Surgical, a $3 billion medical supply and equipment distribution company and division of McKesson Corp.

'Not only will this infrastructure support equipment management, but we already are working with Bon Secours as far as patient tracking, instrument tracking and all sorts of applications that make sense once the hospital has this infrastructure.'

Passive Vs. Active
It also is important to note that there are two different types of identification tags, one that is moderately priced and one that is so expensive that it could not become financially feasible for most hospitals and health systems to purchase.

One is known as a 'passive' tag, which consists of just a chip and no battery. Those generally are used for toll systems, for instance, because it provides no information other than a simple identification number. A device is attached to the front of a car's windshield and is read by an RFID reader at a portal or tollbooth. The other is called an 'active' tag, which has a chip in it and a battery. It sends out a signal every four seconds and can store several pages of rewritable data.

The passive ID tag currently costs about 25 cents, according to industry reports. The active tag is priced at $15 apiece, Dirksmeier said.

'We are able to capture all information regarding a particular asset in a tag, from the day you bought it, the day you put it into service, the depreciation, all the financial aspects, the movement history, where it's been throughout its business processes, from clean and in-use to out-of-service,' he said. 'All the preventive maintenance and service history, everything you need to know for a particular asset, we are able to capture in our software. Even regulatory compliance. It's stored in one location.

'Obviously we're working to get the price down. However, we generate an extremely strong return on investment for the customer, too. We don't sell individual tags, we sell a service model by identifying the problem and telling them how we're going to solve the problem and what it means to them. We do a pretty significant study using their data, but we always stay engaged with the customer.'

Business Workflow Must Improve
Radio frequency identification is gaining tremendous momentum and has generated a tremendous amount of interest among healthcare providers. But it is not just RFID that going to solve the problem of tracking and managing assets. Hospitals have to include improved business processes and improved workflow at the same time.

'We don't talk about RFID, we talk about solving problems,' Dirksmeier said. 'We think there is a great opportunity to scale, because we have a good operating model and solution. Our main focus right now is to achieve our commitments with Bon Secours. That will help us significantly to go out and sell to other health providers.'

THE MC REPORT is a twice weekly publication that focuses on current news, events and trends impacting the healthcare supply chain industry. For more information, go to MC Communications International at www.mccommunicationsintl.com.