Craig Lane, assistant director, application and technical services pharmacy/willow team at Texas Children's Hospital
Photo: Texas Children's Hospital
The pharmacy at Texas Children's Hospital faced a fundamental lack of accurate, real-time inventory visibility across the enterprise. Leaders and clinicians had no reliable way to answer a simple question, "What do we have on hand right now?"
THE CHALLENGE
Any request for inventory information triggered a manual process, requiring staff to physically travel to multiple on‑campus satellite pharmacies and off‑site locations to count items by hand. These counts often took hours to complete and diverted pharmacists and technicians away from patient-facing responsibilities.
When a location ran short on a medication, staff were forced to make a series of phone calls to other sites to locate supply, further compounding delays and operational inefficiency.
This lack of visibility also undermined inventory management and purchasing decisions. Ordering was driven largely by intuition rather than data, even though Periodic Automatic Replenishment levels were labeled on bins. Without consistent, reliable counts, pharmacies routinely overordered "just in case," leading to significant overstock.
"In some cases, bins with a PAR of 30 contained 150 units, while others with a PAR of one held more than 30 units," said Craig Lane, assistant director, application and technical services pharmacy/willow team at Texas Children's Hospital. "A 12‑week pre‑study focusing on 18 medications revealed approximately $100,000 in excess inventory tied up in just a handful of locations, highlighting how quickly costs escalated without accurate insight.
"Equally concerning was the minimal visibility into lot numbers and expiration dates," he continued. "Tracking this information was largely manual and limited to a small subset of medications, increasing the risk of expired products remaining on shelves. While existing safety checks prevented patient harm, there were several near misses that exposed the vulnerability of the process."
Managing drug recalls was labor-intensive and, in some cases, not feasible at all. The inability to identify soon-to-expire medications also eliminated opportunities to proactively move inventory to higher‑use locations, contributing to an estimated $2 million in expired products annually.
PROPOSAL
The proposed automation emerged as part of a broader supply chain modernization effort, when the organization began replacing its legacy system with the Tecsys platform. At that point, pharmacy leadership was invited into the conversation to explore potential use cases. Initial discussions focused on Tecsys' warehouse management capabilities, but it quickly became clear that a point‑of‑use approach would better address pharmacy inpatient workflows.
"Early deployments targeted central pharmacies at two satellite campuses – but the medical center campus presented a far more complex challenge," Lane explained. "With an annual drug spend in 2024 of approximately $440 million and roughly 10% of inventory unaccounted for during yearly inventory, the organization recognized a critical gap – strong controls existed for controlled substances, but noncontrolled, high‑cost medications lacked comparable visibility.
"To address this, pharmacy and supply chain leaders proposed using RFID technology to focus on the most financially impactful segment of inventory: high‑dollar medications," he continued. "While these products represented only about 20% of total line items, they accounted for nearly 80% of overall drug spend. The plan centered on establishing a dedicated, high‑dollar medication satellite pharmacy staffed by a small, specialized team."
The initial scope included medications with a unit cost of $250 or more, including newer specialty therapies with costs reaching into the millions. By concentrating on this subset, the proposal aimed to dramatically improve accountability, tracking and financial stewardship where it mattered most.
"At the time, none of these medications arrived from manufacturers with RFID tags applied," he noted. "Tecsys outlined a conditioning process that would allow products to be incorporated into the system through RFID tagging on receipt.
"However, this was initially a manual, 13‑step process that took approximately three minutes per item and, due to regulatory requirements, had to be performed by a pharmacist," he continued. "With roughly 125 line items to manage and the expectation of frequent counts, early pilots at the satellite campuses revealed that manual tagging could become a significant operational barrier."
Recognizing this risk before full implementation, the organization worked closely with Tecsys to rethink and streamline the approach, identifying process improvements needed to make the RFID-enabled model operationally viable at scale.
MEETING THE CHALLENGE
Within the high‑dollar satellite pharmacy, the organization deployed the Tecsys point‑of‑use platform, anchored by Terso RFID refrigerators and cabinets to enable continuous tracking of high‑value medications. To support the RFID tagging workflow inside the pharmacy, the team worked with Zebra Technologies and Tecsys to co-engineer an RFID-powered system. Zebra is a vendor focused on digitizing and automating workflows to deliver intelligent operations.
"The system included a number of Zebra's hardware offerings, such as the ZD621R RFID printer, DS9908 scanner and TC53E handheld wand, along with Zebra RFID tags," Lane said. "Medications were placed into custom, in‑house-designed 3D‑printed boxes before tagging.
"This approach served two purposes: It significantly improved RFID read accuracy by overcoming common pharmacy challenges such as liquids, foil packaging and other materials that interfere with signal transmission, and it preserved manufacturer packaging integrity," he continued. "Because drug manufacturers may deny credit for returned products if packaging is damaged – including from label removal – this design ensured medications could still be returned when necessary."
All high‑dollar medications within the satellite are stored in RFID-enabled refrigerators or cabinets, providing constant, real‑time visibility into inventory levels. In downstream satellite locations where physical space does not permit additional RFID hardware, the organization adopted a hybrid approach. RFID‑tracked medications are segregated within existing refrigerators and shelving, and pharmacy staff use the RFID wand to conduct twice‑daily cycle counts.
"These counts automatically update inventory levels in the Tecsys system and calculate replenishment quantities needed to return each location to established PAR levels, eliminating manual reconciliation and guesswork," Lane explained.
"PAR levels maintained within Tecsys for the RFID refrigerators and cabinets drive daily automated replenishment orders to the wholesaler," he added. "Upon receipt, pharmacy technicians condition products into the system using a streamlined, four‑step, scan‑only process that minimizes human handling while associating each medication with its RFID tag."
Real‑time inventory data is then surfaced through a Qlik dashboard, providing enterprise‑wide visibility into the quantity and location of all high‑dollar medications. The dashboard also displays lot numbers and expiration dates at the individual unit level, enabling pharmacists to proactively manage short‑dated inventory and reposition medications to optimize use and reduce waste.
RESULTS
"One of the most compelling early results emerged even before full go‑live," Lane said. "As part of a proof of concept, the pharmacy tagged clotting factor products and compared a three‑month period before and after implementation: April to June 2024 versus April to June 2025. During that timeframe, the organization realized $14 million in savings on factor products alone, despite dispensing more doses to patients year over year.
"The savings were driven by real‑time visibility into how much inventory was on hand and where it was located, allowing pharmacists to stop over-ordering and to proactively use inventory before it expired," he continued. "Simply put, knowing exactly what was available eliminated the costly 'just in case' ordering behavior that had previously led to waste."
Following go‑live of the high‑dollar satellite pharmacy, the organization has continued to see measurable and sustained financial and operational gains. Inventory carrying costs were reduced by more than $10 million, largely due to tighter PAR management and automated replenishment based on actual usage.
"At the same time, expired high‑dollar medication waste dropped to nearly zero, as pharmacists gained unit‑level visibility into lot numbers and expiration dates and could move inventory to faster‑moving locations when needed," Lane reported.
"Operational efficiency also improved dramatically: Cycle counts that once took two to three hours per satellite were reduced to under two minutes per location using RFID-enabled handheld scanning, saving hundreds of labor hours annually and allowing pharmacy staff to focus on clinical work rather than manual counting," he continued.
The technology also proved critical during drug shortages and backorders.
"When Lantus went on backorder, the pharmacy team was able to use RFID visibility to instantly identify all inventory on hand across the main campus," he said. "Unlike previous shortages, when inventory often had to be consolidated into a single location, the system enabled tagged products to be safely redistributed back to satellite pharmacies, supporting patient care without disruption.
"Ongoing weekly reporting continues to reinforce the value: Pharmacists now share regular savings updates with leadership, with weekly avoided costs ranging from a few thousand dollars to several hundred thousand dollars," he added.
In one recent example, a $500,000 nonformulary medication was ordered but not used after a treatment change. When another request came in days later, real‑time inventory visibility allowed the team to use existing stock rather than reorder – an outcome that would not have been possible under the prior system, he concluded.
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