Achieving Short- and Long-Term ROI with IoT in Healthcare

Achieving short- and long-term ROI with IoT in Healthcare

July 14, 2022

Leila Kojouri

In healthcare, investing in IoT-powered asset management capabilities like RTLS pays off in routine productivity – and keeps paying off – by helping reduce costs associated with misplaced and underutilized equipment for better use of resources and time.

The Internet of Things (IoT) brings immense value to industries of all shapes and sizes. This is especially true of healthcare, where costs and revenue are pivotal factors for sustainable success. And in an era where hospitals face mounting pressure to do more with less, digital innovations like IoT-enabled asset tracking are more of a necessity than a novelty for survival.

Having reached a value of over $13 billion in 2021, the healthcare asset management market is surging – expected to reach nearly $26 billion by 2027. That said, two primary solutions are leveraged for asset tracking, and each has varying capabilities associated with range, total cost of ownership (TCO), and location accuracy.

Passive radio frequency identification (RFID), for example, employs low-frequency, low-cost tags, with event-based tracking to provide snapshots, or static reference points, of an item’s last known location. While RFID is ideal for retail environments, steep infrastructure and operational expenses, manual processes needed to scan tags for item finding, and lack of real-time precision make it an inferior choice for healthcare facilities.

However, with recent technological advancements, more powerful solutions have emerged, like real-time location systems (RTLS) that automate item finding via active, BLE-based (Bluetooth Low Energy) tags. By transmitting, collecting, and centralizing real-time location data, high-cost, mission critical equipment can be visualized and identified with sub-room level accuracy. BLE-based RTLS deploys quickly, requires minimal infrastructure investment, and can track tens of thousands of items across large, complex hospital campuses.

By facilitating automation and producing robust utilization data associated with purchasing, renting, and optimizing current equipment inventories, RTLS can add substantially to a hospital’s bottom line via short- and long-term ROI in three key areas.

Combat Over-Purchasing of Equipment

Over-purchasing of medical equipment occurs in order to right-size inventory, representing one of the biggest inhibitors to cost efficiency in healthcare. Each year, hospitals purchase replacement equipment for missing assets or those no longer serviceable–often without access to the actual utilization data of said assets.

To put this in perspective, research from the National Academy of Medicine found healthcare facilities waste a staggering $765 billion of equipment annually. A lack of real-time visibility on equipment, its usage frequency, and associated workflows leads to purchasing more inventory than necessary.

Many hospitals falsely believe that resolving equipment availability issues by leasing, renting, or buying more units is less costly than optimizing current inventory management and distribution practices. This “redundancy” strategy backfires as the additional equipment further escalates costs, creating bloated device inventories in most hospitals.

Purchasing new devices or the cost of acquisition via leases or rental contracts significantly impacts a hospital’s capital and operating budgets because these entities bear additional fees related to supplies, consumables, software agreements, staging and installation, and user training.

RTLS empowers healthcare systems with data-driven insights necessary to make evidence-based purchasing decisions, adjust rental needs, or avoid unnecessary purchases altogether.

Prevent Loss of Critical Assets

The loss of critical, costly medical supplies occurs for a litany of reasons, like deliberate or accidental theft, hoarding, or unintended disposal, for example. Replacing lost equipment comes at a high price, with hospital supply expenses up nearly 16% through the end of 2021 when compared to 2019 levels.

Without supplies at-hand, clinicians spend more time searching for missing assets than delivering quality, timely care to patients. This can result in longer hospital stays, decreased bed turnover rates, and in turn, less profitability when new patients cannot be admitted and treated.

Deliberate hoarding is one contributing factor to misplaced hospital equipment. To ensure they’re fully equipped with items needed to do their jobs, care teams may stockpile supplies. However, this ultimately backfires by creating scarcities of the same equipment elsewhere in the facility, perpetuating the cycle of buying or renting more assets to right size, reconcile and recompensate for the perceived loss.

Intelligent, automated inventory management capabilities like RTLS monitor mobile equipment in real-time for precise, room-level location data. This allows admitting and treatment staff to find assets like beds, wheelchairs, crash carts, or pulse oximeters, for example, anywhere in the facility – whether in patient rooms, hallways, procedural units, trash collection areas, laundry units, and sterile processing departments.

What’s more, RTLS enables a proactive approach to prevent accidental or deliberate theft of equipment, rather than reactive – especially in high-traffic areas – by triggering alerts if supplies leave the hospital property. Or, for more specific, departmentally critical equipment, alerts can be sent based on the movement of assets outside of their designated facility perimeters.

By facilitating and automating asset management, RTLS simplifies traceability protocols required to ensure each device is at the right place, at the right time. In the event equipment is sitting idle in the facility for an extended period, notifications can also be triggered to inform personnel, who can return the equipment where it belongs, avoiding repurchases and ensuring immediate availability of the devices clinicians need for treatment purposes.

Improve Asset Utilization for Better Cost Efficiency

A study by GE Healthcare found the average utilization rate of medical devices is at a paltry 42% – meaning over half of a hospital’s equipment sits idle at any given time. The overarching reason for low utilization is simple: Supplies cannot be used if they’re missing or not readily available.

What’s more, low utilization rates are directly tied to overspending and compounding revenue inefficiencies, as unused, idle assets translate to wasted capital investments. Conversely, high utilization rates mean equipment is actively used for patient care, which generates revenue and ROI.

By delivering transparency into where (and what) equipment is doing at all times – in real-time – RTLS can improve utilization by optimizing how existing devices are managed and distributed with room-level accuracy.

Improving asset utilization also helps eliminate needless expenditures, absolving the need to purchase buffer quantities of critical assets like IV pumps or beds and wheelchairs. Costs can be contained further with RTLS capabilities that autonomously monitor PAR levels and establish the minimum and maximum number of given assets that should be readily available.

By setting and monitoring PAR levels, hospitals can also avoid excessive IV pump rental fees, for example, by tracking pumps in various places – from clinical storage areas to disposal areas. Effective PAR level management enhances a hospital’s ability to leverage equipment to its fullest capacity, protecting profit margins while improving operations.

With transparent visualization into asset levels, clinicians gain data-backed insights regarding which units are under or overstocked. And if specialty equipment drops below PAR level and requires immediate attention, RTLS can send notifications to personnel, alerting them that the supply needs replenishing. Leveraging RTLS, a single healthcare system can facilitate the scheduling of mobile equipment usage across multiple facilities and campuses within that same system – increasing utilization rates, reducing capital expenditures, and enabling medical professionals to expand service lines beyond the inventory limited to their own hospital.

This cultivates an opportunity to save hundreds of thousands of dollars currently being misspent on underutilized assets. These funds can then be redirected toward other pressing hospital initiatives, such as staffing, infrastructure improvements, and service expansion.

MachineQ for Asset Management

Capable of improving operations, guiding future purchases, adjusting rental needs, and improving loss prevention, asset tracking technology offers benefits far beyond item finding. Innovations like RTLS drive short- and long-term ROI by automating, simplifying, and streamlining workflows, while optimizing inventory management and reducing expenses associated with underutilized or lost medical equipment.

Backed by the power of Comcast, MachineQ for Asset Management is a turnkey, secure, end-to-end asset tracking solution that delivers up-to-the-minute location data with sub-room level accuracy. By pairing BLE capabilities with an underlying LoRaWAN® network platform, hospitals gain the added benefit of a dedicated, scalable IoT network to expand future use cases, like temperature tracking, occupancy monitoring, and more.

Inclusive of deployment services, MachineQ is a single partner that delivers all of the hardware, software, connectivity, and maintenance – simplifying implementation and removing the burden form internal IT teams. With MachineQ, healthcare enterprises of all sizes benefit from rapid-fire deployment, ongoing assistance including day-two support, and significant cost savings – all under a single investment.