A cost-benefit case for RFID implementation in hospitals: adapting to industry reform

Abstract

Purpose – The purpose of this paper is to analyze a conceptual framework to identify significant benefit and cost attributes of a radio-frequency identification (RFID) system for asset tracking in healthcare facilities. Sources of value function for RFID in healthcare are categorized according to major improvement. Several cost functions are proposed to measure aspects of automated tracking implementation. Design/methodology/approach – The four phases of problem definition, literature identification, assessment and analysis were used to begin the research. A cost–benefit analysis (CBA) was completed to identify the factors within healthcare with major benefits, and finally, a recommended group of items were identified to track with the CBA. Findings – RFID to manage mobile devices increases the utilization rate, decreases annual spending, allows withdrawal of funds for underutilized assets and establishes confidence that equipment is readily available when needed. These benefits provide improved staff productivity, quicker patient turnover, higher quality of care and more cost savings. Real-time location system technologies allow hospitals to be prepared for emergencies requiring the immediate use of medical devices without delay and allow staff to determine the status, condition and location of essential equipment, leading to a decrease in patient wait time. Additional improvements were also found. Originality/value – The transition from pay-for-service to pay-for-performance is taking place in an industry hampered by rising costs and limited available resources. Healthcare expenditures are estimated to grow dramatically, and various factors contribute to rising expenses, including an aging population and increased chronic conditions resulting in higher demand for care, poor quality and operational inefficiencies. Therefore, understanding benefits of new technology use like RFID is critical for improvement and efficiency in healthcare.