The Use of RFID for Asset Management, Risk Mitigation
and Enhanced Financial Performance in the Healthcare Industry

Introduction

The healthcare industry has been challenged over the last few decades to maintain viability as a provider of quality services, while being increasingly encumbered by costly regulatory requirements and escalating expenses. The industry must find solutions that support corporate governance and maintain quality of service, while improving operating efficiencies and lowering the cost of operations.

The advent of cost-effective data capture technologies - combined with the increasing availability of affordable information and communications networks - makes improving accuracy of billing and revenue capture, optimizing use of existing assets and improving operating efficiencies immediately achievable.

The key to the solution is to use low-cost passive RFID (radio frequency identification) tags. These tags use technology that enables facilities to reliably, affordably improve asset management, billing and revenue, patient safety and regulatory compliance. Tags can be placed on equipment, files and critical assets to track their whereabouts in and around medical facilities. The tags are read by electronic sensors placed at strategic locations in a facility, with the tags' embedded information being transmitted to central databases for item identification and location verification.

Similar technology embedded in RFID identification wristbands enables medical facility operators to read, write, lock or delete information on the wristbands in order to track procedures and dispensation of medication, and to provide instructions and alerts. The data is read and used to capture all procedures that are performed and all medications that are dispensed. The data is then electronically input directly into accounting and billing systems. While this enhanced data capture improves revenue and billing accuracy, the information is, above all, secure and confidential because of the system's architecture, encoding techniques, and application of overlaying password access control.

The many benefits of using RFID in the healthcare environment are discussed below.

Operating Efficiencies and Cost Control

At their core, operating efficiencies, and to a lesser extent cost control, revolve around the optimization of the use of assets. Effective asset management, therefore, is a critical factor in patient safety and recovery, and in controlling operating costs. Because medical staff need access to critical or important medical devices in emergency or time-sensitive situations, it is not uncommon for them to hide or hoard equipment they believe they might require. An example of this problem occurs with critical-need portable bio-medical devices such as IV pumps and defibrillators. A common problem healthcare institutions face is locating and accessing these devices when needed. Institutional response to this hiding and hoarding of devices is often to purchase more equipment than operational needs require, resulting in higher costs, excess equipment and lower ROI.

Other operating inefficiencies occur with non-critical but still important mobile equipment such as gurneys and wheel chairs. These expensive devices are often left by staff and patients in inappropriate locations with the result that institutions again have to over-purchase equipment. In addition to over-purchasing equipment, institutions often hire dedicated staff to monitor and track down devices - all at a non-billable cost to the institution. While locating equipment is a major issue, maintaining a schedule of required cleaning and sterilizing, and knowing when leased and depreciated equipment needs to be replaced, are additional challenges.

The key to solving all these operational problems is knowing what and where the equipment is. RFID tagging with strategically located tag readers does this reliably and affordably. Software is now available that integrates, in near real time, the data collected by fixed location readers or hand held devices (such as PDAs and laptops) with virtually all existing database programs. This cost-effective solution is easy to install, and interfaces with stand-alone databases or SAP, Oracle, Lawson, Peoplesoft, JD Edwards, etc. As a result, no major operational, technology or database program changes are required.

Event management software, which is transparently imbedded in the RFID application, is used in a variety of ways - from sending notification of equipment moving from one location to another, to sending alerts when physical file folders are removed from specific locations. The same capability can be used to notify corporate controllers or asset managers of service and cleaning schedules, and equipment replacement cycles.

Billing, Procedure Capture and Revenue Enhancement

The provision of healthcare is a complex business with many back office procedures being standardized to meet regulatory, legal, insurance and billing requirements. The result is that there are pervasive standard forms and processes that relate to procedures, confidentiality of patient data, billing, insurance and governmental reimbursements.

Two of the most important forms are the continuity of care record (CCR) - which includes information relating to a patient and the charge description master (CDM). The latter form is the master information repository that cross references unique reference codes to procedures, medication and patient care. The CDM links the codes to a procedure or medication description, and to corresponding charges for billing, insurance and accounting purposes.

The reference codes are read by transaction processing systems using the CDM as the basis for data capture. A problem arises when paperwork is misplaced or lost, codes are manually entered incorrectly on the CDM, or medical procedures and the dispensing of medication is incorrectly recorded, or not recorded at all. These issues all adversely impact billing, insurance reimbursement and the accurate recording of procedures. The result is that patient care is not fully recorded. The common and costly outcome is that expenses are not fully recovered and services are under billed. The loss of revenue in some institutions is estimated to be as high as 20%.

Using RFID wristbands, patient procedures can be recorded as they occur, using a simple method of entering data wirelessly from readily available PDAs or laptops. Access to information on the wristband is secure and limited to authorized professionals. All CCR and CDM information can therefore be entered on the wristband and accurately read to insurance, accounting and billing databases. As with the asset management RFID tags discussed above, integration software incorporated into the system interfaces with existing database programs, obviating the need for and expense of changing systems.

Patient Safety and Wellbeing

There is a direct correlation between record keeping and patient wellbeing. Record keeping starts with patient registration, continues through the implementation of medical and surgical procedures and ends with business, financial, insurance and billing issues.

Manual patient records are subject to mishandling, are frequently misplaced and often are not available to all medical staff who need access to them. The consequences may include the misapplication of medications, performance of incorrect medical or surgical procedures or mis-recording of information. These events can lead to disastrous consequences for patients and create difficult legal, insurance and business environments for healthcare institutions.

Two applications of RFID technology improve the accuracy of record keeping, resulting in enhanced patient safety and minimized misapplication of procedures. These are 1) using RFID tags on patient files so they can be tracked and easily located when needed, and 2) imbedding all appropriate information required for patient-handling, medical procedures and on-going care into RFID wristbands so that information can be input and read reliably and securely.

Information related to each patient's whereabouts, what procedures need to or have been performed, past medical history, allergies, alerts, etc. can be imbedded in wristbands that are always with the patient. As a result, patient safety and wellbeing are enhanced by the same technology that is used to improve the financial and operational performance of the healthcare provider - i.e. by the use of RFID.

Regulatory Compliance

Healthcare organizations are strictly governed by several federal organizations, including JACHO and HIPPA. These oversight boards ensure the industry rules and legal regulations related to patient care and safety are followed, that healthcare standards are adhered to, and that corporate and operating governance is adequate.

These organizations also act to certify the eligibility of healthcare providers and procedures for reimbursement of capital expense outlays through Medicare. If healthcare providers fail the JACHO and HIPPA audits, the consequences are dramatic, including losing the right to obtain medical expense reimbursement rights.

Accurately tracking and accounting for capital equipment is crucial for regulatory compliance, passing regulatory authority audits and recovering costs associated with asset purchases. For public companies confronted with Sarbanes-Oxley issues, the benefits of accurate asset tracking are compounded.

The accuracy of RFID asset tracking, and the technology's ability to ensure the integrity of organization and patient record keeping, represents a monumental, cost-effective leap forward in improving operating efficiencies, financial performance and regulatory compliance.

Risk Mitigation

General and professional liability (GL/PL) charges cost healthcare service providers up to 25% of their Medicaid reimbursement funds. An additional 50% of GL/PL costs end up paid out in professional fees for litigation. Litigation arises from a variety of healthcare provider actions or non-actions, many of which can be rectified with more effective asset management and record keeping.

(Examples of the application of RFID technology, database integration and event management notification are discussed above.)

Equipment certification is an example of how GL/PL and litigation costs can be reduced with RFID technology's risk mitigation capabilities. Using RFID asset tagging coupled with event management software, technicians and controllers are alerted to what equipment is required to be inspected, cleaned and certified on schedule. This allows healthcare providers to ensure that equipment inspection and certification is compliant with regulations and equipment maintenance requirements, reducing or eliminating litigation over non-compliant equipment. Equipment certification applies equally to existing equipment on a maintenance schedule and to new equipment coming into use at a facility. Pre-tagged new equipment does not slip into usage without inspection and certification, as often happens during manual processes when procurement departments, medical practitioners and controllers' offices have communications disconnects. RFID-based asset management and record keeping, therefore, go a long way toward mitigating risk and the underlying cause of GL/PL and litigation costs.

Return on Investment Considerations

With the advent of wireless networking capability, advances in RFID technology and limited hardware requirements, the cost of ownership and operation of RFID systems have declined dramatically. In fact, most equipment such as laptops, antennae, fixed and portable RFID readers and network gear are now standard affordable off-the-shelf items.

Using backend integration, and data and event management software, no major database program replacement is required, thereby enabling quick, low-cost implementation of RFID asset management technologies with a minimum disruption to existing operations.

Many healthcare providers currently use barcode technology for inventory tracking and validation. Because essentially the same hardware and backend software can be used for barcode data capture and RFID tags reading, transition from bar code technology to RFID asset management, with its dynamic asset tracking, is made seamless and remains cost effective. This capability also makes the transition to RFID modular and highly scalable.

The cost of purchasing integration, management and event notification software is extremely low compared to the cost savings of not having to acquire excess assets, and the potential of lowered GL/PL and litigation charges. Implementation of RFID technology, therefore, has an extremely favorable ROI, independent of the benefits of enhanced regulatory compliance and improved patient safety and customer care.

Fully installed and integrated portable RFID systems can cost as little as the equivalent of several IV pumps, and as much as several hundred thousand dollars for large-scale enterprise-wide licenses. On-going costs are limited to software maintenance licenses as a percentage of initial system purchase price, and tag cost, which decline with volume purchases but are generally between $0.25 and $1.00 depending on the type of tags. In either case, the ROI is compelling.

This paper was prepared for The Swiftsure Group Inc. by Gulfshore Group, an affiliate of Lockwood Technology Inc. LLC. Lockwood's proprietary software fully integrates RFID data capture with existing databases, and provides event notification in response to the movement of RFID-tagged assets. Lockwood's technology has been used for over a decade by numerous Fortune 500 companies and healthcare providers for asset management, inventory verifications, audit and regulatory compliance. The company has recently compiled a turnkey solution in a portable, rapidly deployed kit - QuickTrac© - which has full enterprise support capability and is highly scalable for small and large organizations.

Lockwood Technology has formed an alliance with The Swiftsure Group to provide RFID-based asset management services to critical infrastructure companies. The Swiftsure Group provide systems integration of a variety of fixed and mobile interoperable wireless communication solutions, security services and risk mitigation technologies to federal, state and local first responder agencies and critical infrastructure. For further information, please contact Bruno Riegl at bruno@riegl.us. More information can be found at http://www.swiftsuregroup.com.