Pressure on U.S. Healthcare Facilities Encourages Adoption of RFID

Implementation can enable healthcare institutions to effectively track their assets and reduce costs of misplaced equipment


PALO ALTO, Calif -- The consistently rising patient population in the United States is increasing the demand for cost effective, speedy, and efficient medical solutions. Radio frequency identification (RFID) implementation can enable healthcare institutions to effectively track their assets and reduce costs of misplaced equipment.

New analysis from Frost & Sullivan (http://www.healthcare.frost.com) U.S. RFID Markets for Healthcare, reveals that this market generated revenue of $300.0 million in 2004 and is projected to reach $658.1 million in 2007.

RFID offers tangible returns in a short time span, ensuring smoother operations within healthcare facilities. Though these solutions are promoted as gainful to the clinical community, accounting for the additional expenses for readers and adjoining software is still substantially high. This will continue to be challenge to sale for vendors, as most healthcare facilities today remain financially conservative.

"Investing in an RFID solution for healthcare involves more than one set price per transaction as most of the installations are customized with a wide range of options that match the immediate needs and specifications of the facility under consideration," explains Frost & Sullivan Research Analyst Vivek Subramany. "As a result, pricing ranges offered by vendors often have tremendous variance with institutions spending up to even one million dollars on tags and multiple readers."

To overcome this restraint, vendors must work to educate clinicians on the long-term benefits in adopting RFID solutions, both in terms of operational efficiency as well as a definite cost saving metric. The potential to minimize medical errors and the ensuing liability to institutions must also be stressed.

The recent Food and Drug Administration (FDA) mandate requiring bar code automation -- prompted by increasing medication errors and patient deaths -- do RFID vendors face another challenge today? This move can decrease the money allotted for solutions such as RFID within healthcare technology budgets. As vendors look to overcome this hurdle, emphasis on the advantages of RFID's tracking functionality as supplement, rather than replacement to bar code will be essential.

RFID vendors can also target rural and suburban hospitals as well as large group practice facilities since there is negligible saturation in such areas. To benefit from this large market, vendors must work toward raising awareness on the positive aspects of RFID and speeding up adoption levels in smaller community-based hospitals.

"Vendors need to devise an IT implementation strategy to showcase the technology as a solution that is relevant to the needs of the targeted consumers," concludes Subramany.