Large Healthcare Organizations Embracing RFID

But spending uptick not expected until 2007 as many companies sit on sidelines until standards issues settled, survey finds

But spending uptick not expected until 2007 as many companies sit on sidelines until standards issues settled, survey finds

Mclean, VA — November 29, 2005 — Large healthcare organizations are moving ahead faster and with bigger radio frequency identification (RFID) deployments than the industry overall, according to a new study by consulting firm BearingPoint and The National Alliance for Health Information Technology.

However, industry-wide spending on RFID is poised to dramatically increase only beginning in 2007, driven by senior executives who view the technology as critical to helping achieve their organizations' business goals, especially improved patient safety, the study reports.

"This survey illustrates that most healthcare executives believe RFID technologies are strategic to their business in a number of important aspects, from patient safety to operational improvement," said Jim Gallas, senior vice president of BearingPoint's health services practice. "Over the next 24 months, we expect healthcare organizations will move from the strategy and pilot phases they are in today toward first-stage implementations where there will be a strong opportunity for return on investment."

Patient Safety Top Priority

In the survey of more than 300 healthcare respondents, most from commercial and government healthcare providers, improvement to patient safety was cited as the top benefit for RFID by nearly 70 percent of respondents, with improved patient flow and general productivity ranking second, each cited by 48 percent of respondents as "very important."

In addition, 80 percent of C-level respondents described RFID technologies as important or very important to their business strategies, but just 30 percent of large organizations (those with annual IT budgets over $100 million) have already deployed some RFID technology, along with 13 percent of smaller organizations.

Less than 20 percent of respondents plan to spend more than $250,000 on RFID in 2006, and 53 percent plan no spending at all. But nearly 74 percent anticipate investment in RFID by 2007, and nearly 39 percent anticipate spending $250,000 or more on the technology in 2007 and 2008. Large organizations plan to spend considerably more — between $1 million to $5 million on RFID in 2007-2008.

Cost the Top Roadblock

Cost is a chief barrier to adoption, with 57 percent of the survey respondents saying a major hurdle is lack of available funding and 46 percent citing the cost of RFID tags and readers as a major issue.

Also, 60 percent of respondents said they have delayed some RFID activities while they wait for industry or government guidance on standards.

"Too many healthcare organizations are sitting on the sidelines, waiting for more direction on standards and privacy from the government," said Rod Piechowski, vice president of technology leadership for the Alliance. "Meanwhile, the leaders in healthcare RFID have set their own policies for privacy, security and standards because they see RFID providing a strategic advantage in the marketplace. Now is the time for organizations of all sizes to begin investing in RFID so patients and their overall business can realize the very real benefits the technology can provide."

Applications Growing

The survey, conducted in September and October, also found that RFID technology is already finding many uses in healthcare organizations, including medical equipment tracking using real-time location systems; patient safety systems such as for identification and medication administration; patient flow management; access control and security; supply chain systems; and smart shelving.

Nicholas Evans, director for BearingPoint's Global RFID Solutions practice, and Piechowski will present the results of the RFID in Healthcare Survey in a Web seminar on December 6. More information is available at the BearingPoint Web site.

Additional Articles of Interest

— A survey of consumer healthcare decision-makers shows opportunities for manufacturers to gain competitive advantage by focusing on some key points in their supply chains. Read more in the In Depth article "Leveraging the Supply Chain for Competitive Advantage."

— RFID technology has the potential to change the way supply chains are managed, but in order to be effective businesses need to take a holistic look at the deployment. Read more in the article "Time for RFID: Applying RFID in the Supply Chain."

— For a contrary view of the future of the RFID market, see the article "The O'RFID Factor: A 'No Spin' Look at Where Radio Frequency Identification Is Headed," in the October/November 2004 issue of Supply & Demand Chain Executive.