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Wednesday, April 28, 2010
Wavemark RFID tags help hospitals manage medical device inventory
By Julie M. Donnelly
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A Littleton company is determined to help hospitals modernize their inventory systems using RFID technology that retail giants take for granted. Wavemark Inc. is putting RFID tags on packages of expensive medical devices, such as $2,000 heart stents, in an effort to make sure hospitals have enough, but not too many of the pricey items, as downward pressure on health-care costs has medical facilities looking for cost savings anywhere they can find them.
“Supply chain costs, as a percentage of the cost of goods, is 39 percent for medical devices, compared to 6 to 8 percent for groceries and 3 to 6 percent for retail,” Wavemark founder Patrick Littlefield said.
So the opportunity for savings is high.
In the Wavemark system, RFID tags are synched up to a “Smart Cabinet” which reports data in real time to a cloud-based network. Littlefield says customers include 50 hospital departments nationwide and growing, including Boston-based Tufts Medical Center and Worcester-based UMass Memorial Health Care. Customers buy the system on a subscription basis, and the costs generally range from $50,000 to $100,000 per year, per department.
The company first focused on cardiac catheterization labs because of the cost intensity of those departments. Cath lab expenses account for approximately 5 percent of hospital costs, on average, and devices such as stents, implantable defibrillators, and pacemakers make up 75 percent of each lab’s costs. The customer base has expanded to electrophysiology labs and interventional radiology departments, and is also in use at 20 independent ambulatory opthamology surgical centers. Wavemark is not yet in the high-cost orthopedic market.
“We can use the tags with any devices that are packaged sterile, but the screws and plates used in orthopedics are often loose, and have to be autoclaved (sterilized), so it’s difficult to use the tags,” Littlefield said.
Wavemark, with acurrent head count of 40, was founded in 2003 and has been funded by investments first from friends and family, and then by professional private investors.
Littlefield would not disclose the total amount raised. Federal documents, however, show that Wavemark has taken at least $14.8 million in institutional investments to date.
David Greenberg, inventory manager for Tufts Medical Center, said the system helps the hospital move from a reactive method of tracking inventory, to a pro-active method.
“If you go to Target and you want to know how many they have of a product, they track that in real time. Most hospitals don’t do that.” Greenberg said that previously, he would have to physically be in a department to know how many heart stents or other medical devices were on the shelf, and he was constantly playing catch up. It was a time consuming task for nurses and other personnel to keep track of the items. Using RFID has freed up some time that can more effectively be directed towards patients. The system also allows multiple users to view the system at the same time.
Greenberg said it has also been a major improvement from a safety perspective.
“We can immediately see the lot number, serial number and expiration date. This lets us closely monitor any recalls of products,” he said.
From a cost perspective, the RFID system allows Tufts to maintain razor-thin inventories without being caught empty-handed when a critical surgical case comes through.
Greenberg said that previously it was like a cluttered clothes closet, where clinicians would order extra product simply because they didn’t know what they already had. In addition to real-time inventory, the new system allows analysis over time, so that if a product hasn’t been used in two years, that item falls of the order list in the future.
But Greenberg says there are some limitations in terms of just how real-time medical device inventory management can be.
“In WalMart, if you buy a tube of toothpaste, two seconds later, they are ordering another one. We are getting to that place with some items that are not mission-critical, like gauze,” he said. But unlike other consumables, like gauze or needles, weekly, monthly, or yearly use of expensive devices used in cardiac or ophthalmology surgery is difficult to predict — it just depends how many cases there are.
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