RFID drives $68 Million Expected Savings at Hospital

RFID drives $68 Million Expected Savings at Hospital

BJC HealthCare has achieved incredible results during the first year pilot of BJC SuppyPlus End-to-End Supply Chain Visibility (E2ESCV) project, partnering with Cook Medical and Cardinal Health,

Healthcare Inventory

according to an article published by St. Louis Post-Dispatch on May 28, 2015 titled “BJC Healthcare Recognized for Innovation in Supply Chain Management.”(I’m not sure how I missed this!)  http://interact.stltoday.com/pr/local-news/PR052815013121712

According to the article, the pilot was able to achieve the following “with an expected total inventory management savings opportunity of $68 million over 10 years as validated by the pilot.”

• Achieve an average 23 percent reduction in total par units
• Savings through a 17 percent SKU reduction
• Capture $30,000 savings in expired product avoidance
• Produce additional savings for both BJC and our vendors by reducing total consigned inventory levels
• Decrease nursing and clinician time spent on inventory management, increasing patient care time
• Positively impact operational efficiency and process

From another, related article, “Healthcare Supply Chain Transparency May Save Billions in Waste,” more information was provided from an interview with Steve Kiewiet, Vice President of Supply Chain Operations at BJC HealthCare. http://revcycleintelligence.com/news/healthcare-supply-chain-transparency-may-save-billions-in-waste

“Radio Frequency Identification (RFID) technology, says Kiewiet, provides a valuable solution…  ‘When we have visibility of product from finished goods to the use on the patient and we actually capture demand and consumption versus capturing purchasing activity, we capture consumption activity,’ maintains Kiewiet. ‘We significantly reduce waste and variation in the supply chain. Inventory levels come down for everybody. Product expiration can be virtually eliminated,’”

In my opinion, this is a great case study of successfully utilizing RFID and Supply Chain best practices in healthcare.  According to Kiewet, “most systems fail to track several billions in healthcare dollars – about 5 percent – of expiration or waste because the healthcare industry is not yet able to mimic the fast-paced supply chain models of, say, its consumer goods neighbor.”

At eChain Technology, we are working with several hospitals and medical device distributors all over the world, evangelizing our own variation of this approach to utilize RFID and supply chain best practices to significantly improve hospital profitability and improve patient safety.  It is amazing how many hospital administrators can’t believe that they can possibly have up to $100 million in excess inventory and expired product write-offs.  Universal Device Identification (UDI) compliance is upon us.  http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/UniqueDeviceIdentification/CompliancedatesforUDIRequirements/default.htm

As a hospital or healthcare administrator or evangelist, I hope you can find compelling information here to help you make an informed decision and move forward with your supply-chain and medical product visibility initiatives utilizing RFID.