For years, pharmacy inventory management at Houston-based Texas Children’s relied on a process familiar to many health systems: manual counts, visual inspections and a significant amount of guesswork.
Technicians routinely counted inventory across the health system’s 13 pharmacy satellite locations, checked expiration dates and reordered medications based on what appeared to be missing from a bin. During a drug shortage, teams often had to physically search multiple locations to determine how much inventory was actually available.
“We know what we’ve dispensed, but we sometimes didn’t even know what we really had on hand because it was a very manual process,” Jeff Wagner, PharmD, vice president of pharmacy operations at Texas Children’s, told Becker’s.
To address those challenges, Texas Children’s implemented Tecsys’ radio-frequency identification-enabled inventory tracking technology that provides near real-time visibility into high-cost medications across pharmacy operations.
The system allows pharmacy teams to quickly identify where medications are stored, monitor inventory levels across facilities and track lot numbers and expiration dates.
The initiative initially focused on medications costing more than $150 per unit. Those products were tagged with RFID labels and tracked using handheld scanners that could instantly count inventory within a designated area. As workflows became more efficient, the health system lowered the threshold to medications costing $100 or more and is evaluating whether to expand the program further.
“We can get near real-time visibility of our inventory in procurement through the technology that we’ve got implemented now,” Dr. Wagner said.
The increased visibility has had a significant impact on waste reduction.
Many of the medications included in the program are high-cost therapies that must remain readily available for patients but may be used infrequently. Before implementation, products could sit on shelves until they expired.
Now pharmacy teams can identify medications approaching expiration and move them to locations with higher utilization.
“What we have now through the RFID tagging and scanning technology, we can track items that are soonest to expire and move them to inventory locations where that product may be used more frequently,” Dr. Wagner said.
The financial impact was immediate. During the first quarter after implementation, Texas Children’s spent approximately $14 million less on factor products than it had during the comparable prior period despite a slight increase in utilization.
According to Dr. Wagner, the savings stemmed largely from improved inventory visibility and the ability to proactively use products before they expired rather than purchasing additional inventory unnecessarily.
The health system has also seen a dramatic reduction in expired medications. In fact, Dr. Wagner said the organization’s expired-products vendor reached out after noticing a sharp decline in returned products. “The vendor reached out to us and said, ‘Is something in your system? Is someone on your team forgetting to send us inventory? What’s happening?'” he said.
The technology has also delivered benefits beyond cost savings. Drug recalls, which previously required technicians to manually search inventory locations for affected lot numbers, can now be managed much more quickly. Pharmacy teams can program handheld scanners to locate a specific lot number, allowing staff to find recalled products within seconds.
Texas Children’s is also working with Epic to create end-to-end visibility from inventory receipt through patient dispensing, enabling the organization to identify exactly which patients received a specific lot number if a recall occurs.
Dr. Wagner believes the broader opportunity extends beyond a single health system. He pointed to ongoing drug shortages as an area where improved inventory visibility could help organizations make more informed purchasing decisions and reduce panic buying.
Using the example of the ongoing carboplatin shortage, he noted that nationwide demand for the drug has increased significantly while actual patient utilization has remained relatively stable. What often changes, he said, is purchasing behavior.
Because organizations lack visibility into inventory across the broader market, health systems frequently increase purchases when they hear a shortage may be coming, creating additional pressure on supply chains. “If we had inventory visibility and it was shared more broadly, the impact of this would probably be more even,” Dr. Wagner said.
Texas Children’s recently participated in a White House-supported pilot focused on pediatric oncology drug shortages, where participating children’s hospitals and distributors shared inventory data to improve visibility into available supply.
The experience reinforced a lesson Dr. Wagner believes applies across healthcare. “Inventory visibility is core to the entire medication use process,” he said. “If you don’t really know what you’ve got, or what other people have, or what a distributor has, or what a manufacturer is making, it becomes really challenging.”
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