The future adaptation of RFID to the healthcare industry - Study by Brad Sokol and Sapan Shah

Chicago 25 November 2004The Virtual Medical Worlds Magazine is happy to present an in-depth quality study concerning RFID in health care, written by Brad Sokol from Fast Track Technologies Ltd. and Sapan Shah from Patni Computer Systems Ltd. This paper first was published in October 2004 by the RFID Journal, founded and edited by Mark Roberti. VMW is now publishing the study by courtesy of the RFID Journal.

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The global attention in the world of RFID is focused upon the consumer goods. Many of the larger players have set the deadlines for Pallet tracking and at many places these deadlines are being "readjusted". The Consumer Goods Industry is proceeding at a cautious pace.

So what sparked this RFID consumer goods hype? Where is the business case? The best possible answers to these questions are the ROI drivers used by the industry to arrive at mandates.

The Key ROI Drivers in RFID:

  • Inventory Control
    • Reduction of inventory on hand
    • Reduction of Theft
    • Real time inventory and manufacturing
  • Location tracking
  • Increased asset visibility
  • Marketing:
    • Real time market trends
    • Lower Cost of Sales
  • Reduction of out of stock items
  • Optimization of product supply and selection
  • Labor:
    • Reduced Labor costs at each segment of product accountability
  • Automation of manual actions
  • Defined Workflow
  • Increased labor efficiencies
  • Industry Infrastructure:
    • Existing electronic infrastructure capable for upgrade to support RFID supply chain intuitive
    • Support from major industry leaders

Looking at these ROI drivers, the next question that comes up is - why has market segment not taken off as predicted? What is missing? Where is the next global initiative in the world of RFID? Where else can it be applied with an equal potential? The answer to these is the Healthcare, Pharmaceutical, and the Medical Device/ Instrumentation industry. Apart from the ROI drivers, there are three key additional drivers exclusively found in the global healthcare industry environment. These differentiating divers are elevating healthcare as the leading component of RFID technology.

Healthcare differentiating ROI drivers:

  • TAGGING HIGH PROFIT MARGIN ASSETS GIVEN THE REALITIVLY LOW COST OF RFID SUPPLY CHAIN IMPLEMENTATION
  • REDUCTION OF INSURANCE PREMIUMS TO HEALTHCARE PROVIDERS DUE TO REDUCTION OF LIABILITY
  • PATIENT SAFETY:
    • RECALLS
    • THREAT DETECTION
    • PEDIGREE TRACABILITY FOR STERILIZATION OF INSTRUMENTATION
    • GOVERNMENT REGULATORY MANDATES
    • COMPLIANCE FOR HOSPITAL ACCERIDATION
  • CHANGING REGULATORY AND REPORTING STANDARDS:
    • NEW PEGIGREE LAW FOR TRACABILITY
    • REDUCTION OF REPORTING AT POINT OF USE DIRECT TO FINANCIAL REMEMBURSMENT
    • INCREASE CHARGE CAPTURING TO RESPECTIVE AGENTS
    • HIPAA COMPLIANCE
    • LABELING STANDARDS FOR RFID TECHNOLOGY
  • GLOBAL GOVERNMENT INCENTIVES:
    • GRANTS
    • TAX CREDITS
    • SMALL BUSINESS GOVERNMENT SPONSORED HIGH-TECH INNOVATION PROGRAMS FOR HEALTHCARE
  • MEDICAL DEVICE CONNECTIVITY

The differentiating drivers mentioned above provide an advantageous environment for the Healthcare Industry. These unique factors are propelling healthcare into the forefront of the RFID Industry.

The pharmaceutical industry has successfully marshaled the support of the government regulatory and standards agencies to drive RFID implementation in their industry. Budgeted government financial support to healthcare providers (Hospitals) will create an affordable information network infrastructure to support the mandated regulatory environment conducive to RFID technology.

We believe that the advantageous Pharmaceutical regulatory environment and the subsidies towards building a strong healthcare information infrastructure will make Medical Device and Instrumentation the cascading recipient of the RFID movement.

Our article further outlines a healthcare RFID market strategy for medical devices and instrumentation that demonstrates an incremental approach supported by a price point cost justification. This strategy focuses on an implementation methodology addressing existing systems designs and tangible benefits achieved in a modular supply chain environment.

We are interested in providing a workable business plan to our industry for the benefit of RFID in the healthcare market. Our study will be published in three segments. The first segment will define the healthcare market, our approach and give demonstrated market examples of how our concept works. The second segment will address the issues of system informational trust exchange and how to reduce the redundant data baggage, currently proposed in the existing EPC Model. Our third segment will offer the industry a methodology in attaining low cost of ownership giving specifics on querying mechanisms, proper caching, to improve performance, and how to improve the flow of information.

In this paper, we hypothesize a unique approach that is best fitted for the healthcare market. Not only this approach shows how RFID can be cost effectively implemented in the healthcare industry, but also, it can be applied to other industry verticals. This implementation will lower inventory costs, increase asset visibility, increase patient safety and maximize labor productivity resulting in higher profitability.

To read the entire study, please consult The Future Adaptation of RFID to the Healthcare Industry.

For additional information, you can visit the RFID Journal, Patni Corporation or send an e-mail to Brad Sokol.


Brad Sokol and Sapan Shah

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