Texas Children's Hospital Vice President of Pharmacy Operations Jeff Wagner
Photo: Texas Children's Hospital
Texas Children's Hospital, one of the nation's largest pediatric health systems, had a problem: lack of inventory visibility.
THE CHALLENGE
It needed to know, with confidence, what medications it had on hand, where they were located across the health system, and whether they were still within date or at risk of expiring.
A significant portion of the inventory resided outside of the areas where automation could reliably track it. Products on shelves, in refrigerators or in emergency caches could only be monitored by someone physically locating, counting and documenting what they saw – if they found it at all.
Even when counts were performed perfectly, the manual approach still carried a high risk for inaccuracy, particularly with lot numbers and expiration dates, allowing for medications to be missed or mistaken for usable inventory.
The operational impact showed up every time conditions changed quickly, especially during drug shortages, said Texas Children's Hospital Vice President of Pharmacy Operations Jeff Wagner, who holds a doctorate in pharmacy degree.
"Shortages are often discussed as an unavoidable industry problem, but in reality many of the challenges our industry faces are made worse by the fact that many times we don't have a reliable, real-time view of what inventory already exists within our own environment," he explained.
"In our case, if a product did not arrive as expected, our response often required dispatching technicians or managers to count inventory across multiple satellite locations before we could make an ideal plan," he continued. "That meant we were reacting late and spending precious time validating basic facts about supply instead of focusing on care delivery."
According to some of the most recent industry data, drug shortages cost U.S. hospitals roughly $900 million and 20 million hours of labor annually, making them one of the most common operational challenges for hospital leaders who oversee supply chain and pharmacy operations.
"Like many large health systems, and as one of the largest pediatric hospitals in the country, we were spending more than $400 million annually on medications," he noted. "As we looked more closely at our processes, we realized that many manual inventory processes that are common in much of the industry were creating unnecessary waste and inefficiencies that added up to roughly $40 million each year in expired or underutilized drugs.
"When we took a closer look at high-cost medications, we saw an opportunity to improve visibility and align ordering with usage to reduce the potential for waste," he added.
PROPOSAL
The proposal was to shift from fragmented manual tracking to 24/7 real-time visibility that would automate tracking of medication inventory, including lot number and expiration date, from the time of receipt through patient administration.
"Industry data shows only 20% of hospital leaders have full, real-time visibility across care settings, and we were looking for opportunity to be on the positive side of that statistic," Wagner explained. "We decided on implementing RFID-enabled inventory management with AI support through the Tecsys Point of Use system, which would allow our pharmacy team to tag medications at receipt and then capture movements through storage, retrieval, delivery and administration.
"The goal was to give our pharmacy teams a reliable, real-time view of what was in stock, where it was located and how it was being used," he continued. "A major design point was to make data capture automatic in the places where humans struggle to keep up. This included using Terso RFID-enabled cabinets and refrigerators for highly accurate automated cycle counts and Zebra RFID hardware to support workflows in areas that were not cabinet-based."
The expectation was instead of sending teams out to hunt and count inventory, the technology would maintain a continuous chain of custody that reduced variability and improved accountability.
"Integration was also part of the proposal," he said. "Improving inventory visibility alone would not solve the problem if it existed only in a disparate system that didn't include information related to medication administration and billing.
"The plan was to integrate medication barcode administration already occurring at the bedside in Epic Willow, with Tecsys and our other systems, so pharmacy records, documentation and billing could be fully unified," he continued. "We wanted the ability to access this level of data and granularity in real time to reduce uncertainty around whether a dose was administered and whether charges were captured appropriately."
MEETING THE CHALLENGE
Texas Children's Hospital operationalized the program immediately. Eligible medications are RFID-tagged when they enter the health system and then tracked end-to-end through Tecsys. Pharmacy technicians are key users for tagging and inventory routines, while pharmacists use the dashboard to see live, item-specific inventory data including location, value and expiration dates.
The information is accessible 24/7 from desktop and mobile devices so teams can make decisions quickly.
"The Terso RFID cabinets continuously cycle count inventory and record every movement to create a complete chain of custody every time medications enter or leave one of our cabinets," Wagner explained. "In other areas where medications are stored on open shelving or in refrigerators, technicians use our mobile and handheld RFID reader to perform cycle counts quickly by scanning the entire space in seconds rather than touching each item.
"That combination allows our pharmacy teams to verify inventory levels quickly across multiple locations and identify any misplaced or short-dated medications before they become a problem or expire," he continued. "We can also use this system to more easily locate medications that may be implicated in a FDA or manufacturer recall."
The workflow also integrates with Epic Willow to support accurate billing, he added.
"The net effect is a closed-loop chain of custody from receipt, delivery and bedside administration," he said. "It supports complete oversight, reduces waste, and helps prevent re-dispenses because the administration event can be confirmed."
RESULTS
The health system reduced an inventory workflow that had been a 12-step manual tracking process down to two steps: label and RFID tag. Tagging averages about 7 seconds per drug, and technicians are able to perform this work via tech-check-tech and free pharmacists from manual data entry for RFID tagging.
"Those time savings are real, but the larger win is consistency," Wagner reported. "When the inventory record is updated automatically as part of the standard receiving workflow, the pharmacy no longer has to rely on periodic reconciliation and manual counts to regain confidence.
"That automation also changes what inventory management looks like day to day," he continued. "Instead of hours of manual counting, automated cycle counts in RFID cabinets and rapid scans in non-cabinet locations allow counts to be completed in seconds."
In turn, this allows pharmacists and technicians to spend their time differently. They are now focusing on proactive inventory management, such as identifying short-dated medications, reallocating products across locations before they expire, and making more informed decisions about purchasing and supply planning.
"Before implementing RFID tracking, we saw firsthand how fragile and expensive manual inventory processes could be," Wagner noted. "It's not uncommon for specialty therapies that cost anywhere from $80,000 to $1 million to be misplaced – and many of these medications have strict storage and handling requirements.
"With RFID tagging, we achieved $14 million in annual savings on Factor VII and Factor VIII products, common therapies for treating blood clotting and disorders, even though our utilization was 30% higher than the prior year," he said. "This is purely because of the visibility we have now. When you can see exactly what you have and where it is, you stop purchasing just in case and you start using existing stock more effectively."
The operational levers were straightforward, he added.
"Pharmacists could monitor usage and make informed decisions based on real-time data, while technicians performed audits and cycle counts that kept the data current," Wagner concluded. "Expiration tracking also supported reallocation of product to higher-use areas before it expired. That combination translated directly into fewer avoidable purchases and far less product leaving through expired channels."
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