Sales and Operational tactics to offset Health Care Reform- “Taxing” for Medical Device Companies

The Health Care Reform legislation passed earlier this year encompasses sweeping changes. It requires Medical Device companies to pay attention to a new “tax” slated to begin in 2013 that will impose a tax deductible 2.3% “medical device fee” for US sales on devices. Although 2013 seems a long way off, companies should start looking at Sales and operational tactics now to offset the impact of the new fees and protect their bottom lines. Of course one strategy would be to grow top line sales through price or volume increases domestically and internationally; however that strategy alone is far from being a “silver bullet.” Medical Device companies should begin to evaluate proven cost reduction strategies such as RFID-enabling their sales and distribution operations as a way to improve profitability as a hedge against the new fees.

Raftar has announced a “Risk-Free RFID” Pilot to offer, an opportunity for medical device companies to begin using technoliges to streamline operations and manage inventory and sales as way to prepare their organizations for the new realities of healthcare reform. The Pilot will allow Medical Device companies to build their business case for warehouse and field services autoamtion using RFID and quantify the ROI impact – that can offset the pending “tax” on their top line revenues. The RFID business case from one major Medical Device Manufacturer (MDM) puts it succinctly: “The savings (a 214% ROI) are generated from the elimination of the need to scan every implant item number and bar code.”

3 Key Issues for Enterprise Applications on Smart Phones

The recent smart phone popularity has exploded and these feature-rich devices are gaining acceptance in previously unforeseen and unimaginable ways. Smart Phones are basically handheld computers with enterprise level applications and relevant data stored locally for complete functionality, with or without wireless access to central system. Smart Phones can now be used to pay at convenience stores, check-in at the airports, turn on/off security and lighting at home. Smart Phones have become a core component of many enterprise application roll outs and no longer are these applications considered a “nice to have”.
Our discussion will focus on how these devices can be used by sales reps to conduct business remotely, the tools and technologies required to enter cases and check status, online as well as offline.

Three main issues currently faced any mobile application are:
1. User Interface design / functionality requirements
2. Mobile network connectivity and interfacing with backend systems
3. Operating in Standalone mode and synchronization capability

User Interface design / functionality requirements
All things being equal from a functionality standpoint, a well designed, easy to use interface can make or break one's choice of a given application. Following are some of criteria to consider before making purchasing decisions:
i) Mobile Application users are likely to have limited time and space to access an application. Good organization of information is critical for achieving greater efficiency
ii) Design menus to help you get to the desired page in no more than 3 clicks
iii) Design a navigation system consistent with a regular web browser
iv) Minimize scrolling, especially horizontal scrolling. This can severely hinder user experience
v) Refrain from displaying too many data elements on a screen. This leads to confusion and greater opportunities for “operator error”
vi) Intelligent prompts should help users fill out / navigate through the application easily and do not require users to remember data elements.
vii) Provide indicators to elicit appropriate reactions from users. For Ex: Display signal strength / processing and downloading progress for user to wait before navigating away
viii) Long downloads generally lead to broken connections. Users should be mindful of this

Mobile network connectivity and interfacing with backend systems
Well designed mobile solutions should help professionals use applications remotely and temporarily function independent of backend systems / connectivity. Following are some of the key considerations:
• Latency: The communication between the central server and application running on the smart phone needs to be optimized for communication to account for dropped calls / lack of coverage.
• Bandwidth: The number of data-exchange touch points need to be minimized. Wireless transmission of large amounts of data is inherently slow. Data being sent and received needs to be manageable to ensure speedy receipt and retrieval. Choosing what data to keep locally and what to bring from the central server is more important that compressing the data to reduce file sizes.
• Reliability: The mobile app should be able to handle errors and recover cleanly as wireless connectivity is nowhere close to 100%. A well designed app should be able to let the user pickup from where s/he left off. The amount of “re-entry” of data should be ideally zero but realistically, should be less than 5% of the time.

Operating in Standalone, security and synchronization capability
• Security: Authenticate users against the central server the first time over. Users need to access the application when no wireless connection is available. This should be facilitated by allowing users to login (the last login should be locally cached so that the user can go in and out of the application) without a network connection.
• Reports: Some reports (generally user specific) can be generated from data stored locally but most need data from remote databases. These “on-demand” reports delivered to the mobile app need to be optimized for size and if possible, scheduled during off-peak hours so that users do not experience any access delays
• Security concerns include:
o Authentication
o Authorization
o Assign access Control / Responsibility
o Document Control Plans
o Limiting External Distribution
o Periodic System Audits, Access Control Enforcement and Awareness Training
o Incident Response Capability
o Virus Detection, Control & Eradication

Smart Phones are no longer a “privileged issue” or a symbol of one’s status in the corporate hierarchy. Real business is conducted through these devices and millions of dollars worth of orders flow through these “road warriors”. It is imperative that organizations do due diligence on these applications before embarking on a development project. This not only saves time and money but also accelerates adoption and embracement of these mission critical applications by the end user.

Warehouse Operations & Distribution RFID- Shipping, Receiving, Inventory Management

Warehouse operations are generally manual and time consuming activities. This video illustrates how Raftar's solution automates distribution tasks such as shipping, receiving, tracking and cycle counting of inventory using RFID.


Raftars solution which comprises of an RFID tunnel (an assembly of RFID reader, RFID antennas) and the Raftar Enterprise Suite can be used to verify large number of inventory items through RFID tags accurately and instantaneously.

The solution can be used across multiple verticals such as health-care and medical device manufacturers, jewelry & apparel. The solution is an appropriate for the following scenarios:

• High value goods
• Consignment based delivery - Reverse logistics order processing
• Delivery required on short notice
• Complex and large distribution network
• Closed loop applications
• Item level tracking
• Regulatory compliance requirements

Maintaining Instrument Kits at Hospitals

Expensive Surgical Instruments Kits are loaned (consigned) on a long-term basis to hospitals and are reused and maintained at the hospitals. These instrument kits undergo a thorough sterilization after each procedure. Following illustration describes the lifecycle these instruments undergo.

With the instrument kit lifecycle its important to be able to capture the following critical things while handling and maintaining instrument kits:
1. Their location within the hospital as they are moved a lot
from one place to another. Tracking location allows issue
identification and easy tracking for deployment.
2. Track and record maintenance history to evaluate instrument usage and safety.
These instruments go through wear and tear as they are put through harsh sterilization and usage cycles that can make them unfit or unsafe for use and require maintenance
and replacement.
3. Track and trace instrument kit stock levels within the
facility. The instrument trays are expensive capital asset
for medical device companies ranging from 30-50K a set.

RFID Tags embedded directly on the instrument trays virtually eliminates the need for extensive paperwork associated with the aforementioned functions as data can be written, stored and recalled directly from the Tag. These tags, designed to perform under high pressure and temperature are safe for use with cleaning / sterilization in place (C/SIP) and autoclave. Such tags can also be used in tracking medical equipment throughout the hospital (Ex: Real Time Location Systems (RTLS) ).

The instrument kit and its contents can be tracked within the hospital at various levels. These kits can be identified within seconds using an RFID reader, and following additional critical data can be captured:

• Order number
• Date of manufacture
• Date Sent to Hospital
• Parts in the Kit
• Shipping and receiving dates

Electronic instrument kit maintenance data can be downloaded from RFID Tags and stored for historical purposes:

• Surgical case number
• Number of times used
• Sterilization record (Temperature, Pressure, Duration of Sterilization)
• Approx Replacement date

Improved tracking of expensive kits accrues these additional benefits, ensuring safe and efficient operation:

• Improve instrument kits utilization / throughput
• Reduce delays and cancellations
• Reduce loss / capital costs
• Track duty / life cycle usage
• Asset usage history provides end-of-life data for replacement and maintenance
• Accurate tracking requires fewer inventories
• Better utilization of assets.

The instrument kits shipped from the hospital back to the warehouses can be processed quickly and billed for accurately. The savings in tracking lost instruments alone can be dramatic. Hospitals as well as OEMs can benefit from the RFID technology by keeping track of instrument kits throughout the supply chain.

RFID Equipment selection for Medical device warehouse operations

In our recent white paper “Reading is fundamental” we provide experienced RFID users and newcomers alike a high-level analysis of the Business and Use Cases to support the RFID investment and an estimate of what an RFID System should cost. In addition to the business case and costs it is important to develop an insight into RFID equipment selection for medical device warehouse operations.

An RFID tunnel is an apparatus through which packed containers are passed when performing the RFID based verification – similar to the way imaging is done in a CAT scan or MRI device in a medical procedure.

• Frequency: There are cost trade-offs to be made in selecting the tunnel design and frequency. High Frequency (HF) and Ultra High Frequency (UHF) tunnels can deliver similar performance in a tunnel, however both have different cost implications and application characteristics. The read ranges are different affecting applications and the performance around metal and liquid also varies on the frequency. The white paper provides an insight into decision factors.
• Tag selection is a critical component of overall system performance as different tags are developed for specific applications to optimize the read range, environment, products being handled, and form factors to meet the specific application challenges. A vigorous testing and evaluation process is required to select the right tag from a host of tag options provided by vendors.
• Tag form factor and placement of the tag on the product determine readability. If you handle sizeable quantities of small products, tags with a smaller form factor which can be affixed on the side of the product will be optimal. For larger packages, tags with larger form factors are practical. The ideal choice will depend upon the product mix and content of the product, application, form factor, supply availability and cost. RFID Tags and labels can be purchased with pre-printed information.

RFID Equipment performance rests on some basic design principles. Having a better understanding leads to a better purchase and buying decision. The “Reading is fundamental” white paper presents an RFI (Request For Information) which can be used to whet and qualify potential providers of equipment.

Case and Surgery Scheduling: Mobile Applications for Medical Device Orthopedic Sales Representatives

Sales Representatives and Physicians in the orthopedic industry could be among the biggest beneficiaries from the advent of powerful, mobile applications on smart phones and internet enabled tablet PC’s for real time case / surgery scheduling and inventory visibility and tracking purposes. Working directly with physicians and hospital staff in the field to schedule surgical procedures, the sales rep is empowered when a mobile solution provides instant access to the right information at the right time to effectively track inventory and deliver products and record surgical success and products that were consumed without managing a clutter of paperwork or phone calls and faxes with hospitals staff and physicians. So what is the right information, served up at the right time by the mobile application to ensure that the sales rep is as productive as possible?

With a mobile application, field sales reps have the benefit of shared access to the same enterprise data as warehouse operations, customer service, and other functions. However, key functionality for the mobile application pinpoints the precise information needed in the field:

• Access via a “Favorites” list or keyword search to pre-filled templates for scheduling and ordering implants and
instruments for commonly scheduled procedures
• Real-time product availability and pricing information
• User-specific views to inventory request status and individual and team case schedules
• Alerts to physician driven procedure changes or updates

The benefits of an empowered and effective field sales operation ripple though the entire enterprise. Of course the sales reps themselves spend less time on administration and more time delivering customer value and growing their business, and the top line. Bottom line benefits accrue from improved business processes and workflows that result in fewer errors and delays and can be measured in:

Improved Customer Service:
• Minimize errors
• Enhance order management
• Up to the minute reporting of order status
• Quickly adapt to changing order schedules

Enhanced Inventory Utilization:
• Track and Trace products - know exactly where your products are at any given time
• Reduce inventory write-offs due to offsite inventory tracking and accountability
• Better use of inventory sourcing for increased turnover
• Improved in-transit inventory visibility and utilization (including trunk inventory of other sales reps)

Mobile applications deliver a compelling value proposition for field services representatives to overcome sales and operational issues. Smart phones are capable of delivering feature rich applications an increasing availability to data capture technologies like barcodes and RFID. A closed loop application that ties the order to cash and inventory management solution is essential for orthopedic and medical device operations.

RFID System Costs: A “Should Cost” Analysis for Components and Solutions

In 2005, the RFID journal put together an analysis of “RFID System Components and Costs” that quoted Forrester Research which estimated the market at $12 billion. A “Should Cost” analysis for components and solutions was estimated at $500,000 to deploy an RFID solution - $128,000 for consulting and integration, $315,000 for internal project team resources, and $80,000 for tag and reader testing. RFID Journal’s prediction at the time has proved prescient, “As the technology improves and is more widely adopted, costs will come down and the technology will be easier to install.”

Costs have indeed come down – by a factor of five. In our recent RFID Buyer’s Guide White Paper we provide system implementation costs and estimate the average company should be able to deploy RFID for about $100,000 for an inventory tracking solution. Beyond the natural downward technology cost curve that tends to lower costs as technologies mature, and the recent availability of COTS (Commercial Off-the-Shelf) applications as compared to what was essentially a “roll your own” approach, there are three main fundamental changes that are responsible for driving down costs in our model:

• First and foremost, the original RFID Journal model ascribed to the view that, “To get business value from all of the information collected, companies will need middleware to filter the data. They may need to upgrade enterprise applications and integrate it with RFID middleware. Each component will have up-front costs and some unexpected costs.” Forrester’s analysis pegged the cost of the middleware layer alone at $183,000. Raftar’s software architecture stack eliminates much of the cost from earlier generation solutions by eliminating the middleware layer, embedding the communication protocols and data filtering modality in the application software itself.
• Secondly software technologies like Webservices, SOA along with better software adapters have further reduced the cost of systems integration efforts through pre-built APIs (Application Interfaces) to back-end ERP systems for Sales and distribution operations for order to cash and consigned inventory management operations.
• Finally, RFID technology itself has been deployed in a variety of use cases and the need to prove the viability of the technology through extensive testing and reports is no longer needed. RFID tags and readers have been used in a variety of applications and standard products exist in the right scales to be able to leverage some of the economies of scale. Walmart is now pursuing item-level tagging for all its apparel. Similarly, Raftar has developed an item level tracking solution for orthopedic implants as a repeatable process.

Tag costs are another variable in deploying an RFID solution. However, these costs can get allocated to an operational budget as consumables. Reusable tags may cost more however economies of scale and existing use cases have made the overall solution cost effective. Its possible now to deploy a system quickly and genearte quick returns.