Thursday, March 01, 2007

Maybe health care's not so different after all......

The following is an outline of a recent Wall Street Journal article:

Costs are rising, and a large purchaser is putting pressure on its providers to invest in technology to reduce costs and make data collection easier. The providers complain that while they’re being forced to make the investment, the purchasers are going to reap the benefit. Further, providers argue that the new technology hasn’t simplified their offices, but on the contrary, has created more complicated workflows. Consumers are concerned that their privacy will be compromised by this system that makes their personal data electronic.

Sounds like another tired tale of the barriers to adoption of electronic health records, doesn't it? Well, it isn't.

The title of the article is “Wal-Mart’s Radio-Tracked Inventory Hits Static” (subscription required for the full article). It's not about health care at all, in fact, but the parallels with the ongoing discussion of barriers to adoption of EHRs seemed striking to me.

Some excerpts from the article are below (I learned from Paul Levy’s blog not to copy the entire article):

Wal-Mart Stores Inc.'s next leap forward in ultra-efficient distribution is showing signs of fizzling....

A pioneer in low-cost practices widely copied by competitors, Wal-Mart has pushed its suppliers to use exotic radio-activated tags to chop labor and inventory costs anew. But tests using the tags aren't showing any savings, and suppliers forced to invest in the relatively expensive technology are grumbling....

Wal-Mart is pushing the RFID technology on the idea it will increase efficiency and eventually save everyone money -- manufacturers as well as Wal-Mart. Yet as Wal-Mart searches for an answer to its rising costs, suppliers are saying RFID isn't it....

The current generation of RFID tags cost about 15 cents apiece while bar codes cost a fraction of a cent. Beyond the tags, suppliers have had to bear the cost of buying hardware -- readers, transponders, antennas -- and computer software to track and analyze the data.... On top of that, suppliers say that instead of saving labor, RFID tagging actually takes more: While bar codes are printed on cases at the factory, because most manufacturers have yet to adopt RFID, those tags have to be put on by hand at the warehouse....

More problems have come into play in recent years, including...consumer concerns that once the tags are on each item on a store's shelves -- from tubes of toothpaste to personal computers -- that they could be used to track individual buyers....

Wal-Mart wants to get the value of this technology, and they want to do it fast. I suspect that they will eventually just invest in their supply chain by splitting the cost of the RFID investments with the suppliers. Happens all the time in every industry: "Require" your suppliers to do it themselves, but if they don't do it fast enough, or well enough, or it threatens to put them out of business, roll up your sleeves and partner with them to make the joint investments that benefit everyone.

For some reason, most health insurers and purchasers (and even Wal-Mart) aren't applying this same logic to their health care delivery supply chains. That isn't as much a market failure as it is a failure of imagination.....

3 comments:

Anonymous said...

do you have an email address?

Micky Tripathi said...

mtripathi@maehc.org

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