Each year, Texas Children’s Hospital, a leading pediatric health system headquartered in Houston, Texas, spends more than $440 million on medications to treat its patients. After doing a careful inventory management audit, Gee Mathen, Director of Pharmacy Clinical Applications and Technical Services at Texas Children’s, said that the pharmacy team discovered a loss of more than $40 million due to drug expirations, wastage, diversion and other inventory management issues.
“That delta is 10% of what we purchased,” he said. “We couldn’t tell you where [the missing drugs] were, what happened to them, whether we had still had them or didn’t have them. That’s a huge challenge.”
To address the issue, Mathen and Craig Lane, Manager of Application and Technical Services, spent significant time studying inventory management workflows, processes and patterns to understand where the losses are occurring. They discovered that much of the problem could be associated with “human touch.”
“Any process that requires multiple states of human touch is destined to be wrought with issues of trackability,” Mathen noted. “That creates a phenomenon where you have individuals not knowing what they have and buying more than they need.”
Not only does that drive up costs, he pointed out, but it also adds opportunities for potential diversion. And while controlled substances are most often mentioned when discussing drug diversion, Mathen said that high-value medications are also frequent targets for theft. If the pharmacy team could better track these costly drugs, the health system could realize substantial savings.
Creating a customized RFID-based solution
Texas Children’s has been using radio frequency identification (RFID) solutions for drug kits, trays and airway boxes for several years to streamline the refilling process. After determining that the health system regularly uses 784 high-value and specialty drugs that cost $100 or more per unit, they worked on developing a new type of RFID system to track these items.
Lane focused on more efficiently tagging each medication, taking an onerous 12-step process that was fraught with human error to a simpler 2-step workflow. “The biggest thing is to make sure you are tagging the right product and that the tag is good,” he advised.
In the new workflow, a pharmacy technician scans the high-value drug to generate a label with all pertinent information that is applied to a box. That box is associated with only that unique medication. The box then moves to a conditioning station where the technician scans the already validated drug label and applies an RFID tag to each unit within the box.
“This process has eliminated the need for people to type anything into the system; the scans take care of inputting the data into the system as we go,” said Lane. “Then the drug is associated with a particular RFID location, like a fridge or a cabinet. This ensures we have validated that the drug is the right product, that it’s going to the right location and that the RFID tag is working before it gets there.”
In the future, as more pharmaceutical manufacturers offer medications that are pre-tagged, Lane said it will make systems like this one even more accurate and efficient. “Having manufacturers add an RFID tag ahead of time would be great and would ensure there were no human errors in any of our processes,” he added.
Real-time reporting for smarter inventory management
The new system is already in use at two Texas Children’s satellite hospitals. Lane said the initial training for personnel was “intense,” but that staff now appreciate how easy the platform is for them to use. The pharmacy team is now in the process of rolling this process out at Texas Children’s downtown campus.
According to Mathen, the new system is saving pharmacy staff significant time in tagging and data entry and is also making it much easier to track drugs across facilities. And since Texas Children’s staff members must use their identification to access drug storage, the health system can easily jumpstart investigations into potential diversion or excess wastage if needed.
“At a glance, we can pull up an app and know how much of drug X we have and where it is. We can see who took what so we can keep our staff accountable if items are missing,” he said. “This system gives us perpetual inventory visibility and management, so we are not ordering things we don’t need to order.”
The system also automatically generates a list of what drugs are needed at the end of each day to ensure that the pharmacy is not unnecessarily overstocking high-value items. This has already resulted in a $50,000 savings at one site. Mathen expects to see more cost reductions as they get the system up and running at their largest campus, and he also hopes to expand the system to help staff manage controlled substances in the future.
“We are very excited about this solution and its potential for savings,” he added. “If we can get the C-suite millions of dollars back this year by preventing these kinds of losses, that’s a huge win for us.”
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