RFID Technology Manages the Orthopedic Product Life Cycle

How this technology streamlines the supply chain (among other benefits)

Daniel Sands
Solstice Medical

Daniel Sands Solstice Medical

As orthopedic hip and knee reconstructive segments mature, competitive and market pressures to provide value also increase. Profitable growth in any company is dependent on the organization’s ability to effectively manage the increased pressure stemming from the proliferating needs of both the customer and service providers.

At the heart of satisfying this need continuum is innovation and technology deployed at a rate that does not overshoot the market’s needs or readiness for a given technology. Besides innovation in areas such as biomechanical design, implant materials and procedural technology, orthopedic companies are looking for other tangential opportunities to ensure profitability and provide stakeholder value—all while not overshooting, or perhaps overlooking, a market need.

Innovation will continue to be ever-important as opportunity abounds for the orthopedic sector, given that the US population is aging and conditions such as obesity and arthritis are prevalent. According to a report by Frost & Sullivan, an estimated one in eight Americans is over the age of 65, and this number is expected to double by 2030. Additionally, more than 125 million people in the United States alone are affected with chronic disease. These demographics provide broad assurances in business planning for orthopedic device manufacturers.

However, these same demographics are providing real care issues for critical care facilities. Shrinking nursing resources and facility expansion limitations are two critical future healthcare realities. The US Census bureau estimates that one million new and replacement nurses will be required over the next 25 years. Furthermore, healthcare facilities will continue to face overcrowding and space limitations.

In the face of such realities, a collaborative effort is needed between device manufacturers and healthcare providers to address the demand for faster, more efficient and cost-effective healthcare.

A Logistical Conundrum

Logistics and the delivery of surgical equipment to a hospital represent critical factors in the overall value proposition of a device manufacturer to the healthcare provider and patient.

Throughout the history of orthopedics, an increasingly complicated supply management system between the surgeon, hospital, sales and manufacturers has evolved. There are as many as 10 major supply chain points compounded by thousands of locations compound by remote distances across the world. Complications in managing millions of implant and reusable surgical instrument assets are common in distinguishing between hospital consigned inventory vs OEM consigned inventory vs loaner inventory. Managing discrepancies with inventory counts and who is responsible for losses can become a confusing  three-way reconciliation between the hospital, distributor and OEM.  Countless hours are spent trying to count and differentiate to the item level in the thousands of possible locations. However, many device manufacturers today still rely on traditional “honor system” techniques to ensure delivery and execution of surgical procedures (see Figures 1 and 2).

As volume and demand increase at an expected 10%-11% per year for implantable procedures, so will the demand for improved life cycle management systems. The estimated worldwide value of consigned and loaned orthopedic implants, instruments and supplies is over $12 billion. Even at 99% inventory accuracy, that leaves $120 million in asset losses every year. Improved asset management will be required to sustain a company’s profitable growth trajectory in line with market demand—especially in maturing market segments.

Hospitals alone won’t be able to manage the increased volume of surgical devices to efficiently meet the growing orthopedic demand. The collaboration of OEMs, distributors and hospitals in providing real-time surgical device data will be as critical as the surgical device itself. Newer technology is finally making this possible.

A “Unique” Proposition for a Compelling Need

Product identification is not a new phenomenon, especially in the consumer world. For years, bar codes have been utilized to scan items such as groceries and clothes. In the healthcare market, use of bar codes also has been prevalent for certain devices. Furthermore, in 2004, the FDA finalized regulations requiring bar codes on the labels of most human drug products and biological products.

Over the past several years, Radio Frequency Identification (RFID) has made significant technological advancements over its 60-year history. The unique identification of objects without direct line of sight—and sometimes from considerable distance—has opened many doors for improved operational efficiency. Unique Device Identification (UDI) provides the ability to obtain real-time, item level asset information within the supply chain. Healthcare facilities and medical device manufacturers see emerging benefits of the RFID technology over traditional lot traceable bar coding.

Many times with emerging technology, the excitement for its benefits provokes ideas of quick solutions to old problems. Sometimes new technology disrupts or changes the way business is done, creating opportunities where there were none before. Other times, technology simply provides incremental, predictable growth.

Which is the case with UDI and RFID? Is this technology integration into orthopedics inevitable or a passing craze brought on by other industry mandates?  

In two separate occasions in 2005, the Food and Drug Law Institute facilitated discussions between the FDA’s Center for Devices and Radiological Health (CDRH) and various healthcare industry stakeholders to consider whether medical devices should be uniquely identified. The CDRH evaluated whether the FDA should mandate UDI through regulation or adopt a voluntary approach.  Many CDRH participants clearly favored a mandatory approach; however, they also recognized that more information is needed before considering specifics of a regulatory program.

Bar Code or RFID?

Are there compelling business needs that require orthopedic manufacturers to act now, or should they wait and allow the pendulum to swing before determining whether bar code or RFID technology is the better course of action? After all, bar code technology has been available for years, and only 40% of hospitals are using it to track supplies, according to the an article in the Federal Register (Feb. 26, 2004).

Although bar code technology is advancing, limitations remain with size, line of sight and durability in the medical device and healthcare supply life cycle. RFID, on the other hand, offers enhancement opportunities to bar code technology and can provide a much wider scope of functionality.

Today’s RFID technology is capable of providing unique item-level real-time data from greater distances, and this ability is automated. The value of this capability is very exciting—especially in areas of patient care and expensive orthopedic device asset management.  

However, RFID has limitations such as interference from metals, liquids and other radio devices. Various RFID frequencies also may interfere with other RF-emitting devices commonly found in the healthcare environment.

The term RFID, like bar code technology, is broad and does not refer to a single technology or application. RFID is available at different frequencies, allowing solutions with various performance characteristics. Bar codes, for example, operate on dozens of different bar code formats (called symbologies) and utilize different numbering systems. Neither RFID nor bar code technology offers a one-size-fits-all solution, and multiple standards in both technologies will coexist to satisfy a wide array of needs to improve healthcare (see sidebar, “Putting Standards in Their Place,” on page 44).

A Strategic Consideration

So are asset life cycle management and RFID systems as integral and necessary to a surgical procedure as a broach, cutting block or instrument case?  It’s easy to identify value and purpose with a tangible item versus an intangible item. After all, without that cutting block you can’t make the appropriate alignment cuts for the knee implant. Intangible items such as information and data bombard all business people to a point of filtering only the precious information that is imperative for our jobs to be performed efficiently and easily.  

Remember the last time you opened a case of instruments the morning of a procedure and discovered you didn’t have all the instruments? There was probably nothing easy about that day!

Information is power, and asset life cycle management software and embedded RFID hold promise to provide real-time critical instrument set and implant information when it’s needed in multiple locations simultaneously. The advantages of UDI and asset life cycle management systems have the power to automate information gathering and data utilization, creating enhanced operational and sales efficiency for both the device and healthcare provider.

What is provocative is the idea of broad integration of asset life cycle management and RFID technology to provide real-time access to critical information that can create increased customer satisfaction and stakeholder value. This sounds great in theory, but is the technology capable? A global project may take years to implement, and this raises the question of whether today’s technology will be outdated tomorrow. How can a company justify the expense to leverage RFID and asset life cycle systems across the entire enterprise or specific product applications?  

Figure 1

Answers to these objections begin with developing a strategic plan that aligns departmental goals with overall larger company and market objectives. A starting point is to consider the collaborative efforts in the medical device supply chain between the OEM, its suppliers, distribution, sales and healthcare provider (Figure 1).

Outside of an FDA mandate to require UDI, OEMs must determine whether RFID and asset life cycle management systems align with their base strategy in providing superior technology as a competitive advantage. Once that value determination is made, a systemic approach to deploying RFID technologies may be considered.

Figure 2

Because of the emerging nature of RFID technology, standards development and FDA compliance, companies will need to determine a starting point and centralize efforts to create an RFID business case. It becomes readily apparent that inefficiencies in the medical device supply chain and hospital reprocessing logistics (Figure 2) could be improved by integrating RFID technology.

Companies may be considering starting with a top-down approach that looks to solve global systemic problems and then make plans for broad implementation. The value of this approach is in defining the ultimate goal in two, three or five years from deploying this technology. However, initiating progress to achieving this goal may seem overwhelming.

Deployment Strategies

A bottom-up approach may be considered in parallel, choosing to eat the proverbial elephant one bite at a time (Figure 3). Starting with smaller, specific problems that can realize near term cost-effective solutions can be combined to ultimately contribute to accomplishing the overall goal over time.

Figure 3

A standards organization that has been created to support successful deployment of RFID is EPC Global, a non-profit group that set up the Uniform Code Council and EAN International. These two organizations maintain bar code standards and are helping commercialize Electronic Product Code EPC technology.  

EPC Global suggests five phases of RFID adoption that companies should consider: investigation, experimentation, trial, pilot and deployment.

1. Investigation. This phase involves learning the basics of RFID and determining applications that align with the company’s strategic direction. Creating steering committees or cross-functional teams led by senior executives from major functional areas can help build the business case from the bottom and up. As team members learn about the technology, identify potential uses of RFID and identify benefits, consequences, possible obstacles as well as solutions.

2. Experimentation. At this point, it’s time to set up a lab, purchase tags and interrogators as well as get some hands-on experience.  

3. Trial. This phase involves use of field trials to evaluate real world application. A field trial is more than playing around with the technology—it’s a formal critical process to determine:

• The scope and plan for RFID

• What processes, products, equipment or people to tag (followed by prioritizing field trials)

• How results will be measured to determine magnitude of benefit

• Labor and material cost requirements

• What testing within a process cycle or logistics environment should be conducted

• Time required to complete the trial

• Analysis needs to determine results and return on investment

The field trial should answer this question: Does it make sense to spend additional money to set up a pilot and eventually deploy RFID?  

4. Pilot. Also known as the “pre-production run,” this phase allows for additional evaluation and preparation required for a wider scale deployment.  Refinements should be expected as further issues are exposed during the trial phase. Experiences will more clearly refine your assumptions before final deployment.  

5. Deployment. At this point, you are finally ready to complete rollout or market launch.

As you can see, the recommended EPC Global deployment process for embedding RFID is not much different from processes used by manufacturers to develop orthopedic products.  

By considering the parallels of the orthopedic device development process and RFID deployment process, one can more easily visualize the technology adoption in healthcare. Synergistic development paths will allow for embedding RFID into implant components, implant packaging, surgical instruments and cases without adding additional lead time into device manufacturer’s development or manufacturing lead-times.  

On a recurring basis, device manufacturers can realize significant product management and improved supply chain logistics. Unique device RFID technology and specific device information populated into an asset life cycle management system will provide device manufacturers a disruptive value for themselves and sustaining value to healthcare providers and patients.

Daniel Sands, president and CEO of Solstice Medical, has more than 14 years of comprehensive product development, marketing, manufacturing and international business experiences with two leading orthopedic device suppliers. Solstice Medical is a pioneer of Asset Life Cycle Management and embedded Radio Frequency Identification (RFID) Solutions providing innovative unique device identity and tracking technology and implantable micro RF sensor technology. Dan can be reached at [email protected] or (260) 399-1651.