True Asset Utilization

Peter Seiff, for HealthLeaders News, August 14, 2007

Everyone is talking about using RFID technology to solve healthcare's overwhelming asset utilization problem. I visit and talk to hospital administrators almost every day and they universally tell me they want to solve this problem.

There is a lot of capital and operating expense consumed here, as well as a lot of inefficiency. No wonder they are so enamored with asset tracking technologies that promise to make this problem disappear by adding a small tag to all the assets. I'm afraid, however, that they may end up disappointed if they only implement an RFID-based asset tracking system. In my experience, it is not a good standalone solution to the problem of asset utilization because it fails to address the root cause.

This tendency to ignore the root cause is evident in several recent articles I've read in the trade publications about "successful" asset tracking installations. In almost every article there is a quote from someone important saying that staff used to hoard the equipment, but with the asset tracking system they now know where the equipment is located.

Is this a success or a work around? I would think the most important question to answer is why does the staff hoard equipment? There is obviously an unmet need. These people who dedicate their careers to caring for people are not simply outlaws. Nor are they engaging in a high-tech game of cat-and-mouse. More likely, they have adapted their procedures so that they can provide the care that they are charged to do.

Today's asset tracking systems are more focused on forcing compliance than a real solution to the problem. The trouble is, of course, that the staff will just re-adapt. RFID tags can be defeated (it is possible by the way, but I will refrain from providing instructions as I don't advocate it and I think it's counter-productive). Since the root cause was not addressed, the hospital would be back to where it started--only several of hundred thousand dollars poorer (sound familiar?).

Nobody would defeat the system, you say, because such counter measures would violate hospital policy. Probably so, but doesn't hoarding also fall into that category? The point is that people will continue to make their own adaptations until the root cause is addressed. This local optimization results in sub-optimal global performance, which is why it needs to be addressed.

Hoarding, and most other sub-optimal inventory issues, is caused by the staff's lack of confidence in the ability to obtain needed equipment when and where it is needed. Essentially, there is a struggle between maintaining local inventories versus centralized inventories. Local inventories provide convenience for the unit-based staff because equipment/supplies are easily and quickly accessible. However, this usually results in redundant inventory, requiring excess capital and carrying costs. Also, localized inventory can create problems related to the compliance with cleaning and calibrating of medical equipment. Centralized inventories, on the other hand, provide buying and maintenance efficiencies, but can cause delays getting equipment/supplies where they are needed.

There is a way to resolve this dilemma. If efficient transportation were available, hospitals could enjoy the financial benefits of a centralized inventory while providing the unit staff with the convenience of a local inventory. All that is needed is the staff's confidence that they can call for any supply and it will be delivered in an acceptable amount of time. This type of delivery efficiency is now available in the form of highly reliable, low cost, delivery robots. With the implementation of a consistent delivery mechanism, hoarding would be reduced, if not eliminated, because it solves the real issue: accessibility of equipment/supplies. Asset tracking can only provide location information. What then? Someone has to be available to retrieve and redeliver the equipment. Presumably, if these resources were available, the problem wouldn't exist in the first place. Asset tracking systems only help us to know where equipment is; solving the problem requires us to get it to where it needs to be--and that requires a physical transportation solution.

Another good way to get insight into this problem is to look at Federal Express. This company has mastered the confidence issue. When you send something via Federal Express, you are "absolutely, positively sure it will get there overnight" (remember that advertising slogan). Most of us think of Federal Express this way. They manage to get millions of packages delivered to the right places, on time, all over the world every day-- and guess what--they don't use RFID tags on their packages. FedEx uses bar codes, a technology which, ironically, most hospitals would consider outdated, adding more proof that this is not a problem that can be solved by technology. FedEx is essentially a transportation logistics company that specializes in moving things very efficiently. If hospitals could build a similarly reliable "internal" logistics system, the hoarding problem would disappear.

Sometimes, when a problem is big, we tend to look for a big solution. We want to find that magical something that will just make the problem go away. In some cases, technology has the capacity to work like magic; more often, it does not, and the solution requires some technology and a lot of hard work. Asset tracking has the allure of magic-- the story is very compelling--it sounds like it can solve the expensive problems caused by hoarding. I am not trying to say that asset tracking systems don't provide value--they can. But they are an incomplete solution for asset utilization because they only address the symptoms while ignoring the cause. Our healthcare workers should be able to get equipment and supplies when and where they need them, and they shouldn't have to resort to hoarding to ensure it. We owe them a real solution and not a system that forces them to compromise.

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Peter Seiff is vice president of customer solutions at Aethon. He can be reached at pseiff@aethon.com.