In The News
Excerpt from Healthcare Informatics Online
March 2006
Full article is available online at www.healthcare-informatics.com
Tuning in to RFID
Radio frequency identification (RFID) technology has been one of the hottest topics of the past year across a wide range of industries. RFID champions say the technology is disruptive — capable of compelling revolutionary savings in manufacturing and logistics. Those with a more cautionary outlook cite privacy concerns and a largely pre-standards industry landscape in which hype has often trumped results.
The prospects of RFID within healthcare have mirrored those of the larger picture of the technology. In fact, several of the industry’s most knowledgeable users and providers say that, by and large, executives responsible for making the decision on how or whether to deploy RFID are not even cognizant of the most basic characteristics of the technology’s main branches — active and passive RFID tags. That’s the bad news.
The good news is that an ever-increasing amount of information gathered by early adopters is providing compelling evidence that RFID technology — if preceded by careful due diligence and a clear understanding of the underlying problems a deployment is meant to solve — can deliver on those promises of profound disruption.
George Morley, director of biomedical engineering at PinnacleHealth, Harrisburg, Pa., says the savings he estimated from deploying an active RFID tracking system designed by Radianse, Lawrence, Mass., were so large PinnacleHealth’s finance department said,"George, you’re making this up!"
"I probably came out with a return on investment for the installation of the system in Harrisburg Hospital in less than a year," Morley says. Even Morley’s most conservative estimates showed an ROI in two years, but he says, "I think we can achieve much better than that."
Mike Dempsey, founder and chief technology officer of Radianse, says there are enough active RFID deployments in the field for vendors and organizations to calculate accurate ROI projections; the steps involve getting access to the raw data in a given area, detailed input on what processes the technology is intended to address, and lastly, assigning an economic value to the problem.
"For example, if you have patient flow issues, and want to get more patients through your system, then you can assign an economic value to that in terms of average revenue per patient, average length of stay, or some other industry- accepted metric," he says. "Then it becomes straightfor ward, it’s just a math problem." Dempsey claims the typical ROI analysis on a Radianse deployment comes to the breakeven point somewhere between 11 and 18 months.
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