Impact of RFID Technology on Health Care Organizations

Abstract

Radio Frequency Identification (RFID) technology has been considered the “next revolution in supply chain management” (Srivastava, 2004, p. 60). Current research and development related to RFID focuses on the manufacturing and retail sectors with the aim of improving supply chain efficiency. After the manufacturing and retail sectors, health care is considered to be the next sector for RFID (Ericson, 2004). RFID technology’s potential to improve asset management in the health sector is considerable, especially with respect to asset management optimization. In fact, health expenses have increased substantially in Organisation for Economic Co-operation and Development (OECD) countries in recent years. In Canada, the public health budget amounted to $91.4 billion (CAD) for the year 2005–2006 compared to $79.9 billion in 2003–2004 (CIHI, 2005). Moreover, the health care industry has been the focus of intense public policy attention. In order to curb this upward trend, the public heath sector in Canada is subject to strict budget constraints. Among the different alternatives for reducing expenditures, the improvement of asset management within the different health institutions appears to be worthwhile. RFID technology seems to be a viable alternative to help hospitals effectively manage and locate medical equipment and other assets, track files, capture charges, detect and deter counterfeit products, and maintain and manage materials. In other words, health care organizations would benefit particularly from RFID applications. The main objective of this study is to investigate the potential for RFID technology within one specific supply chain in the health care sector. Based on a field study conducted in a large nonprofit hospital, this article tests some scenarios for integrating RFID technology in the context of two warehousing activities.